Grasping Reality with Both Hands: bradford-delong.com: tag:typepad.com,2003:weblog-1227122018-03-20T16:14:40-07:00If you would rather just see Highlighted Posts...TypePadtag:typepad.com,2003:post-6a00e551f08003883401b7c9364cf9970b2018-03-20T16:14:40-07:002017-12-15T07:34:53-08:00**Note to Self**: This is your reminder: * 178.4 **180.8** million people are represented by the 48 **49** senators who caucus with the Democrats. * 144.1 **141.7** million people are represented by the 52 **51** senators who caucus with the Republicans. * 65.9 million people voted for Hillary Rodham Clinton and Tim Kaine to be their president and vice president * 63.0 million people voted for Donald Trump and Mike Pence to be their president and vice president.J. Bradford DeLong

Note to Self: This is your reminder:

178.4180.8 million people are represented by the 4849 senators who caucus with the Democrats.

144.1141.7 million people are represented by the 5251 senators who caucus with the Republicans.

65.9 million people voted for Hillary Rodham Clinton and Tim Kaine to be their president and vice president

63.0 million people voted for Donald Trump and Mike Pence to be their president and vice president.

Some Fairly-Recent Must- and Should-Reads...tag:typepad.com,2003:post-6a00e551f08003883401b7c8deb796970b2018-03-18T19:07:32-07:002018-03-05T10:49:10-08:001. **Noah Smith**: ["Everyone in the econ world (or the politics world, really) should read this thread about Kevin Hassett](https://twitter.com/): "@dynarski 'Is now a good time to talk about how Kevin Hassett stole the intellectual property of an untenured Harvard professor & her grad student?'... 2. **Paul Bedard**: [Larry Kudlow predicts 4%-5% growth, 'investment boom'](https://www.washingtonexaminer.com/washington-secrets/larry-kudlow-predicts-4-5-growth-investment-boom): "Larry Kudlow, picked to be President Trump’s new economic adviser... 3. **Ezra Klein**: [@ezraklein on Twitter](https://twitter.com/ezraklein/status/943618464744443904): "I don’t know what the _[New York] Times_ should’ve done with Thrush. But I watched the efforts to plant oppo and smear @lkmcgann in the aftermath of her reporting. Anyone who thinks coming forward with these experiences is easy, even now, is wrong. I am beyond proud to be her colleague..." 4. **Robert Waldmann**: [A Comment on the Return of “It’s Baaaack”](https://angrybearblog.com/2018/03/a-comment-on-the-return-of-its-baaaack.html): "Twenty years ago, Paul Krugman warned that the liquidity trap was not just an issue in the economic history of the 30s... 5. **Will Wilkinson**: [The DACA and immigration debates are about whether Latinos are “real Americans”](https://www.vox.com/the-big-idea/2018/2/22/17040286/immigration-daca-white-nationalism-ethno-trump-racist-latino-citizenship): "Challenging the idea that Latino Americans can be truly American undercuts the very idea of America... 6. **Charles Plosser** (2008): [Meeting of the Federal Open Market Committee on March 18,...J. Bradford DeLong

Ezra Klein: @ezraklein on Twitter: "I don’t know what the [New York] Times should’ve done with Thrush. But I watched the efforts to plant oppo and smear @lkmcgann in the aftermath of her reporting. Anyone who thinks coming forward with these experiences is easy, even now, is wrong. I am beyond proud to be her colleague..."

Barry Ritholtz: Inflation: Price Changes 1997 to 2017: "It is notable that the two big outliers to the upside are health care (hospital, medical care, prescription drugs) and college (tuition, textbooks, etc.)...

Iason Gabriel: The case for fairer algorithms: "Software used to make decisions and allocate opportunities has often tended to mirror the biases of its creators, extending discrimination into new domains...

Matthew Klein: The euro area’s fiscal position makes no sense: "Germany’s needless austerity is regrettable, but the bigger problem is that the governments in the rest of the euro area are either unwilling or unable to borrow more..."

The war on NIMBYism continues: David Roberts: A sweeping new bill targets California’s housing crisis: "SB 827... would require that all areas within a half-mile of a high-frequency transit stop, or within a quarter-mile of a bus or transit corridor allow heights of at least 45 or 85 feet..."

Jared Bernstein: The Importance of Strong Labor Demand: "By conventional measures, the U.S. job market has suffered some degree of slack (i.e. insufficient demand for labor) for about 70 percent of the time since 1980. The absence of persistent, strong labor market demand has a significant negative impact on wages and incomes... fall[ing] disproportionately on the least advantaged..."

Iason Gabriel: The case for fairer algorithms: "Software used to make decisions and allocate opportunities has often tended to mirror the biases of its creators, extending discrimination into new domains...

Dani Rodrik: Trump’s Trade Gimmickry: "The imbalances and inequities generated by the global economy cannot be tackled by protecting a few politically well-connected industries, using manifestly ridiculous national security considerations as an excuse...

Anatole Kaletsky: The Market Dogs That Didn’t Bark: "The bond market’s complacency about US interest rates and inflation may be surprising... [may] turn out to be an expensive mistake... but it is a fact...

Matthew Klein: The euro area’s fiscal position makes no sense: "Germany’s needless austerity is regrettable, but the bigger problem is that the governments in the rest of the euro area are either unwilling or unable to borrow more..."

The war on NIMBYism continues: David Roberts: A sweeping new bill targets California’s housing crisis: "SB 827... would require that all areas within a half-mile of a high-frequency transit stop, or within a quarter-mile of a bus or transit corridor allow heights of at least 45 or 85 feet..."

Jared Bernstein: The Importance of Strong Labor Demand: "By conventional measures, the U.S. job market has suffered some degree of slack (i.e. insufficient demand for labor) for about 70 percent of the time since 1980. The absence of persistent, strong labor market demand has a significant negative impact on wages and incomes... fall[ing] disproportionately on the least advantaged..."

Belle Waring: Young Man Has Crisis While Europe Stumbles Into War: "I read Radetzky March by Joseph Roth, and it is really the best thing ever. You should all read it, and unlike all the other books I’m thinking of, it’s not eleventy billion pages long..."

Sophia Besch: The End of Little Germany?: "Germany has long enjoyed the luxury of pretending to be something it is not: a small country. Now that a new government has finally been formed, Germany must start thinking of itself as the major economic player it is, and behave accordingly–preferably before new ministers settle into old routines..."

Brian Faler: 'This is not normal': Glitches mar new tax law: "Rep. Richard Neal.... 'We’re not going to willy nilly into this with, all of a sudden, a technical corrections bill that has not been sufficiently aired', he said. 'There needs to be an acknowledgment that this was done in haste and that there were many mistakes'..."

Ann Marie Marciarille: The Smoking Gun That Is a Swiss Flag: "Collusion... between Michigan's Allegiance Health and Hillsdale Community Health Center... to derail acute care facility competition in treating cancer, heart,and orthopedic patients.... Svvy colluding parties signaled their territorial allocation by the exchange of a Swiss flag. As the Swiss flag traditionally stands for freedom, honor, and fidelity, I'm thinking they may have gotten their signals crossed..."

Hugh Son and Jennifer Surane: Dimon Says He'll Fight for Tax Breaks Amazon Gets for HQ2: "He’ll call the governor of whichever state Amazon.com Inc. picks for its second headquarters and try to get the same benefits. 'I’m not kidding', Dimon said. 'You gotta fight for your company, folks, just keep that in mind. If you don’t, no one else does'..."

Creating Your Own Private Internet Intellectual Elysiumtag:typepad.com,2003:post-6a00e551f08003883401b7c9591de3970b2018-03-17T19:17:03-07:002018-03-17T19:17:03-07:00[Absolutely brilliant from Henry Farrell](http://www.bradford-delong.com/2018/03/should-read-absolutely-brilliant-from-henry-farrell-if-being-muted-by-jonathan-chait-were-to-regularly-produce-such-goo.html): If being muted by Jonathan Chait were to regularly produce such good thought, Chait should mute everybody immediately!: >**Henry Farrell**: WE’RE ALL GOING TO NEED SAFE SPACES: Speech doesn’t scale, and at a certain point, the scarce resource isn’t speech but attention. Even when people who want to argue with you are entirely sincere, there is a point at which you simply can’t pay attention to everyone who wants to talk at you on Twitter and still function. You need to make choices. Second, speech is increasingly being weaponized to drown out inconvenient voices... making online political conversation more or less impossible in authoritarian regimes... tendentious, irrelevant, and angry comments... a “flood of fake content, seeding doubt and paranoia, and destroying the possibility of using the Internet as a democratic space” (in passing, I used to be very strongly in favor of anonymous free speech on the Internet; I’ve had to seriously rethink that). In the standard shibboleth, the best antidote to bad speech is more speech. What Putin’s Russia and Xi’s China have discovered is that the best antidote to more speech is bad speech. And while there is a lot of paranoia about...J. Bradford DeLong

Henry Farrell: WE’RE ALL GOING TO NEED SAFE SPACES: Speech doesn’t scale, and at a certain point, the scarce resource isn’t speech but attention. Even when people who want to argue with you are entirely sincere, there is a point at which you simply can’t pay attention to everyone who wants to talk at you on Twitter and still function. You need to make choices. Second, speech is increasingly being weaponized to drown out inconvenient voices... making online political conversation more or less impossible in authoritarian regimes... tendentious, irrelevant, and angry comments... a “flood of fake content, seeding doubt and paranoia, and destroying the possibility of using the Internet as a democratic space” (in passing, I used to be very strongly in favor of anonymous free speech on the Internet; I’ve had to seriously rethink that). In the standard shibboleth, the best antidote to bad speech is more speech. What Putin’s Russia and Xi’s China have discovered is that the best antidote to more speech is bad speech. And while there is a lot of paranoia about Russian bots, there was, I think, a very real attempt to use these techniques to stir things up in the US election, and in Western European countries too...

My test for my RSS and Twitter feeds is:

Is this person who has just shown up in my timeline the:

smartest

knowledgeable

well-intentioned

interesting

person who is right now writing about:

an important issue

that I care about

at a level and in a mode I can understand

?

(Some people would add “kind“, but I find that people who lean over to Fargo be kind call their punches and require one to spend too much work in Aesopian readings.)

If yes, read on. If no, skip. If no and they are annoying, mute. If no and they keep showing up in my timeline, mute. If they still keep showing up in my timeline, block.

This produces a very interesting and useful individual feed. By now the combination of my RSS and Twitter feeds is truly an intellectual Elysium.

The problem is that it does nothing to produce a functioning intellectual community. And that is what we really need: we are smart when we are part of a functional anthology intelligence. We are dumb when we are off on our own. And we are very dumb when we are part of a dysfunctional combination clown circus and shit show—and there are a lot of people speaking out there who get money or status or pleasure from trying to create dysfunctional combination clown circuses and shit shows.

No, I do not have an answer...

Misapplied History...tag:typepad.com,2003:post-6a00e551f08003883401b7c92ae1eb970b2018-03-16T18:50:49-07:002018-03-16T20:05:20-07:00I confess that I am a great fan of Applied History. Theoretical arguments and conceptual frameworks are, ultimately, nothing but distilled, crystalized, and chemically cooked history. After all, what else could they possibly be? And it is very important to know whether the distillation, crystallization, and chemical cooking processes that underpin the theory and made the conceptual frameworks were honest ones. And that can be done only by getting good historians into the mix—in a prominent and substantial way. But if this is what "Applied History" is to be, AY-YI-YI-YI-YI-YI-YI!!!! **Niall Ferguson**: [Fetch the purple toga: Emperor Trump is here](https://www.thetimes.co.uk/article/fetch-the-purple-toga-emperor-trump-is-here-f0rcbd20m): "Think of Harvey Weinstein, the predator whose behaviour was for years an 'open secret' among precisely the Hollywood types who were so shrill last year in their condemnation of Donald Trump for his boasts about 'grabbing' women by the genitals... >...“Women should never be talked about in that way,” declared the actor Ben Affleck a year ago, after the release of Trump’s “locker room” exchange with Access Hollywood host Billy Bush in 2005. However, Affleck became “angry and saddened” about his mentor Weinstein’s record of assaulting and harassing women only after it was splashed all over The New Yorker. This...J. Bradford DeLong

I confess that I am a great fan of Applied History. Theoretical arguments and conceptual frameworks are, ultimately, nothing but distilled, crystalized, and chemically cooked history. After all, what else could they possibly be? And it is very important to know whether the distillation, crystallization, and chemical cooking processes that underpin the theory and made the conceptual frameworks were honest ones. And that can be done only by getting good historians into the mix—in a prominent and substantial way.

But if this is what "Applied History" is to be, AY-YI-YI-YI-YI-YI-YI!!!!

Niall Ferguson: Fetch the purple toga: Emperor Trump is here: "Think of Harvey Weinstein, the predator whose behaviour was for years an 'open secret' among precisely the Hollywood types who were so shrill last year in their condemnation of Donald Trump for his boasts about 'grabbing' women by the genitals...

...“Women should never be talked about in that way,” declared the actor Ben Affleck a year ago, after the release of Trump’s “locker room” exchange with Access Hollywood host Billy Bush in 2005. However, Affleck became “angry and saddened” about his mentor Weinstein’s record of assaulting and harassing women only after it was splashed all over The New Yorker. This was too much for Rose McGowan, apparently one of Weinstein’s many victims, who told Affleck to “f--- off”—whereupon other actresses claimed Affleck himself had groped them.

In my experience few things enrage ordinary Americans more than the hypocrisy of the liberal elites.... At least Trump does not pretend to be a feminist. Weinstein raised hundreds of thousands of dollars for Hillary Clinton’s campaign. In January he joined the anti-Trump Women’s March in Park City, Utah. In May he sat next to Clinton at a fundraiser for Planned Parenthood, America’s biggest provider of birth control products and procedures, including abortion....

The brilliant Tom Holland... his book Rubicon: _The Triumph and Tragedy of the Roman Republic, “censoriousness was the mirror image of a drooling appetite for lurid fantasy.” Yes, that does sound familiar.... [In] Holland['s] telling, the [Roman] Republic dies too imperceptibly to be mourned. Superficially its decline was the result of recurrent civil war. But the underlying causes were the self-indulgence and social isolation of the Roman elite, the alienation of the plebeian masses, the political ascendancy of the generals and the opportunities all these trends created for demagogues. Reading Holland’s description of the libidinous orgies and extravagant cuisine of Baiae, the fabled Roman resort on the Gulf of Naples, it is impossible not to be reminded of present-day La La Land....

Congress was meant to be the dominant branch of government.... Progressives pressed for reform of what Woodrow Wilson disparagingly called “congressional government”. The 1900s saw the first presidential programmes—the Square Deal, the New Deal, the Fair Deal—sold to the public through newspapers and later radio and television. The 1960s brought presidential primaries and caucuses. With the advent of the internet the system took a further step down the road to direct plebiscitary presidential rule. The result was President Trump, king of the Twitter trolls....

Imperceptibly, the foundations of the republic have corroded. In Rome no one quite noticed that Octavian—or Augustus as he was renamed in 27BC—was becoming an emperor, for the outward forms of republican governance endured. Yet the symptoms of corrosion were all around, not least in the decadence of the Roman elite. I have never been persuaded by those who fear an American fascism in the style of Sinclair Lewis’s It Can’t Happen Here. None of the protagonists in today’s American drama would look well in a brown shirt, jackboots and tight breeches. But togas? I can’t imagine a garment better suited to Weinstein and the president-emperor he both reviles and resembles.

Back up. Even Ferguson admits that for the Roman Republic "its decline was the result of recurrent civil war". However this, he says, is only "superficially" the case. So let's look at the Roman Civil Wars.

According to Plutarch—who is appallingly close to being our only source for this stuff—they began in 133 BC when:

Blossius of Cumae... said it would be a shame and a great disgrace if [the Tribune] Tiberius [Sempronius Gracchus], a son of Gracchus, a grandson of [P. Cornelius] Scipio Africanus, and a champion of the Roman people, for fear of a raven should refuse to obey the summons of his fellow citizens; such shameful conduct, moreover, would not be made a mere matter of ridicule by his enemies.... Many of his friends on the Capitol came running to Tiberius with urgent appeals to hasten thither, since matters there were going well.... As soon as he came into view the crowd raised a friendly shout, and as he came up the hill they gave him a cordial welcome and ranged themselves about him, that no stranger might approach.

But after Mucius began once more to summon the [Assembly of the] Tribes to the vote, none of the customary forms could be observed because of the disturbance that arose on the outskirt of the throng, where there was crowding back and forth between the friends of Tiberius and their opponents.... Fulvius Flaccus, a senator... told him that at a session of the senate the party of the rich, since they could not prevail upon the consul to do so, were purposing to kill Tiberius themselves, and for this purpose had under arms a multitude of their friends and slaves. Tiberius, accordingly, reported this to those who stood about him, and they at once girded up their togas, and breaking in pieces the spear-shafts with which the officers keep back the crowd, distributed the fragments among themselves, that they might defend themselves against their assailants. Those who were farther off, however, wondered at what was going on and asked what it meant. Whereupon Tiberius put his hand to his head, making this visible sign that his life was in danger, since the questioners could not hear his voice.

But his opponents, on seeing this, ran to the senate and told that body that Tiberius was asking for a crown; and that his putting his hand to his head was a sign having that meaning. All the senators, of course, were greatly disturbed, and [Publius Cornelius Scipio] Nasica demanded that the consul should come to the rescue of the state and put down the tyrant. The consul replied with mildness that he would resort to no violence and would put no citizen to death without a trial; if, however, the people, under persuasion or compulsion from Tiberius, should vote anything that was unlawful, he would not regard this vote as binding.

Thereupon Nasica sprang to his feet and said: "Since, then, the chief magistrate betrays the state, do ye who wish to succour the laws follow me." With these words he covered his head with the skirt of his toga and set out for the Capitol. All the senators who followed him wrapped their togas about their left arms and pushed aside those who stood in their path, no man opposing them, in view of their dignity, but all taking to flight and trampling upon one another.... The attendants of the senators carried clubs and staves which they had brought from home; but the senators themselves seized the fragments and legs of the benches that were shattered by the crowd in its flight, and went up against Tiberius, at the same time smiting those who were drawn up to protect him.

Of these there was a rout and a slaughter, and as Tiberius himself turned to fly, someone laid hold of his garments. So he let his toga go and fled in his tunic. But he stumbled and fell to the ground among some bodies that lay in front of him. As he strove to rise to his feet, he received his first blow, as everybody admits, from Publius Satyreius, one of his [Tribunal] colleagues, who smote him on the head with the leg of a bench; to the second blow claim was made by Lucius Rufus, who plumed himself upon it as upon some noble deed. And of the rest more than three hundred were slain by blows from sticks and stones, but not one by the sword.

This is said to have been the first sedition at Rome, since the abolition of royal power, to end in bloodshed and the death of citizens; the rest though neither trifling nor raised for trifling objects, were settled by mutual concessions, the nobles yielding from fear of the multitude, and the people out of respect for the senate. And it was thought that even on this occasion Tiberius would have given way without difficulty had persuasion been brought to bear upon him, and would have yielded still more easily if his assailants had not resorted to wounds and bloodshed; for his adherents numbered not more than three thousand.

But the combination against him would seem to have arisen from the hatred and anger of the rich rather than from the pretexts which they alleged; and there is strong proof of this in their lawless and savage treatment of his dead body...

A decade later, in 121 B.C., the consul Lucius Opimius would seize upon the murder of his attendant Quintus Antyllius by partisans of Tiberius's brother Gaius Tiberius Gracchus as a pretext for the Senate's passage of the Senatus Consultum Ultimum—"consules darent operam ne quid detrimenti res publica caperet" ("let the consuls see to it that the Republic suffer no harm") and then murder Gaius. Afterwards politicians who thought Rome should do more to subdivide public land engrossed by rich senators either thought better of proposing agrarian reform laws or recognized that they needed an army. And it turned out that they could raise armies that would be loyal to them rather than the constitution of the Republic. And so we have those twenty who raised and commanded armies loyal to themselves sometimes within but often outside the Republic's legal framework:

All of these commanded armies loyal to themselves and not to the Senate (or to whatever rump of the Senate was sitting in Rome and issuing Senatus Consulta). None of these were both (a) victorious and (b) willing after victory to do what was necessary to make future armies loyal to the Senate rather than to their commanders in the future (although Sulla did try).

Thus it is no accident that the style of post-Republican rulers became Imperator—victorious commander—rather than king or dictator or something else.

Plutarch saw it as a chain of norm-breaking.

And I think he was right.

First, Scipio Nasica's faction broke the norm that the prosperity from conquest was to be widely shared, not least through ample and lavish land distribution and colonization. Second, Scipio Nasica's and then Opimium's Optimates broke the norm that Roman magistrates not be murdered in the streets. Third, Gaius Marius broke the norm that soldiers be recruited only from those whose household and kin had something of property to lose. Fourth, Gaius Marius broke the norm that magistracies be short-term and temporary. Fifth, Sulla broke the norm that commanders obeyed the Senate and people rather than marching on Rome to cow them with their soldiers. Sixth, Pompey broke the norm that commanders disband their armies after campaigns rather than hold them in reserve, even if demobilized. Sixth, Bibulus broke the norm that magistrates not filibuster—not declare that every day was inauspicious for public legislation. Seventh, Caesar broke the norm that magistrates respect the vetoes of their colleagues. Eighth, Pompey broke the norm that Roman politicians respect their peers as equals. Ninth, Caesar broke the norm that Roman politicians respect their superiors and the Senate, and crossed the Rubicon.

Why were these norm-breakings successful? Why did they proceed? Plutarch says it was out of the "hatred and anger of the rich" that led them to react to discontent at the distribution of land and spoils in a new way. Before, he said, there had always been compromise and adjustment and incremental change, "the nobles yielding from the fear of the multitude, and the people out of respect for the senate..." But Publius Cornelius Scipio Nasica's generation changed that, both in their unwillingness to share the profits of imperial conquest and in their willingness to kill opposing political leaders.

Why did the ball keep rolling? Because increased maldistribution opened up further opportunities for norm-breaking. Male Roman citizens from 450 B.C. to 150 B.C. joined the legions, and got victory, loot, land, and honor at the hands of the Senate. It was a profitable and respected thing to do with your life. Afterwards, starting with the political ascendancy of Publius Cornelius Scipio Nasica and his faction, while service in the legions would still get you victory and booty, it would not get the distribution of land to farm to you and your kinfolk—not unless your general kept his hands firmly on the reins of power, and for that to happen you needed to be willing to come back to the standards and fight against your fellow citizens, if necessary.

Theoretical approaches and conceptual frameworks to be derived from this historical episode? Many and important. Applications to today? No direct applications, but a lot of thoughtful ideas and questions raised, for history does rhyme.

But this questions, ideas, approaches, frameworks, and possible applications are not those that Niall Ferguson wants to draw. His version of "history" is not wie es eigentlich gewesen in the least.

At a rhetorical level, Fergusons' piece is something that will be, as Jacob T. Levy likes to say, an interesting piece for far-future historians at Radioactive Liebowitz Morlock University to decode. The villains are Harvey Weinstein, Donald Trump—sorta, because at least he is not a hypocrite pretending to be a feminist, and hypocrisy is the big sin of the "Hollywood types who were so shrill last year in their condemnation of Donald Trump for his boasts about 'grabbing' women by the genitals"—Ben Affleck, Hilary Rodham Clinton, hypocritical "liberal elites", the celebrities of Los Angeles, Woodrow Wilson, Theodore Roosevelt, Franklin Delano Roosevelt, Harry S. Truman, and the Internet.

This is a strange list of villains indeed.

And on an application level—Ferguson's reading of Holland's history of Rome sees the causes of the possible imminent fall of the American Republic and America as: "the self-indulgence and social isolation of the Roman elite, the alienation of the plebeian masses, the political ascendancy of the generals and the opportunities all these trends created for demagogues... the libidinous orgies and extravagant cuisine of Baiae, the fabled Roman resort... [that] remind[s me of] La La Land..."

Is this well-founded in the Roman experience? No. Ten thousand times, no. NO!!

Were the military-political powerful ones of the late Roman Republic able to raise and command armies loyal to themselves because of Ferguson's list of causes? Let's run through it:

"the self-indulgence... of the Roman elite..."? Nope. An addiction to "Eastern", "Greek", or "Egyptian" vices was a propaganda accusation that members hurled against each other: self-control was a principal Roman virtue, and to be ridden by your vices and your addictions showed that you were unfit to hold imperium. But Gaius Julius Caesar's being "every woman's husband and very man's wife" did not seem to harm the loyalty of his soldiers or his political and military skill.

"the libidinous orgies and extravagant cuisine of Baiae..."? Nope. See above.

"the... social isolation of the Roman elite..."? Nope. Roman society was patterned in a strong patron-client network. You could not be socially isolated and remain part of the elite. And the fact that all elite factions had powerful social-network hooks into a population with lots of soldiers and ex-soldiers in it was what made the civil wars possible.

"the opportunities... created for demagogues..."? Which demagogues? Gang leaders Titus Annius Milo and Publius Clodius Pulcher? But they were much more tools of broader political factions engaged in norm-breaking than independent actors. Lucius Appuleius Saturninus, Publius Sulpicius Rufus, Tiberius Sempronius Gracchus, and Gaius Sempronius Gracchus? They had no armies. And so they were killed. So nope.

"the political ascendancy of the generals...". Well, this is not a cause but an effect. This is the thing to be explained. This is the series of civil wars that Ferguson dismisses as "superficial", right? But it is the key question: Why would Rome's citizens in the fourth, third, and second centuries B.C. fight for and be loyal to the Senate and the consuls, while in the first century B.C. they fought for and were loyal to their generals?

"the alienation of the plebeian masses..." Here we are indeed getting somewhere. But why were the plebeian masses alienated? Could it be that they thought they deserved... a fair share of imperial prosperity? A Square Deal, a New Deal, a Fair Deal? And did not the hubris of elites in seeking to engross the spoils of empire and stymie all reform call forth nemesis? That would be a better form of Applied History, I think, but it would not focus on hypocritical liberal elites, LA celebrity parties, Hillary Rodham Clinton, and Theodore Roosevelt. It would focus on income and wealth inequality, and on those so eager to defend it.

Certainly Plutarch thought it was "the hatred and anger of the rich" which broke the probability of compromise "the nobles yielding from fear of the multitude, and the people out of respect for the senate" that started the ball rolling. And he was, if not there, our historian first responder able to talk to many and read much that is lost to us. Listen to him!

Applied History: "For some time, the majority of academic historians have tended to shy away from questions of contemporary interest, especially to policy-makers...

...but also of interest to students interested in policy issues. Previous generations were less shy of such questions. Writing in 1939, the great Oxford philosopher of historian R. G. Collingwood made the case for applied history succinctly. “True historical problems arise out of practical problems,” he argued. “We study history in order to see more clearly into the situation in which we are called upon to act. Hence the plane on which, ultimately, all problems arise is the plane of ‘real’ life: that to which they are referred for their solution is history.”

If historians decline to address current issues, then those making policy will be denied the benefit of historical perspective. Writing in the Atlantic in 2016, Graham Allison and Niall Ferguson made the case for establishing a White House council of historical advisers, analogous to the council of economic advisers. Their argument was that decision-making in Washington (and not only there) would be improved by a more systematic effort to take the lessons of history into account.

In the hope that other historians share the view that there is more to be learned from history than merely “how to make new mistakes” (in A.J.P. Taylor’s phrase), we are holding what we hope will be a series of conferences devoted to applied history. What sort of questions will the conference address? The following are the ones to be addressed by speakers and commentators:

What lessons can a modern democracy learn from the fall of Roman Republic?

Are recent developments in American politics unprecedented, or is Trump merely populism revisited?

Is deep economic or political reform possible in the People's Republic of China?

Did the United States learn the right lessons from defeat in Vietnam?

How far are major historical discontinuities explicable in terms of climatic change?

Are cryptocurrencies likely to replace fiat currencies in the foreseeable future?

How much of a Potemkin superpower is Putin’s Russia?

What can we learn from past attempts to learn from the past?

Can we learn anything of the Cold War that is relevant to the world in 2018?

How might 20th-century globalization unfold?

Does rising inequality matter?

What does history suggest will come of the recent upsurge in Islamist-inspired violence?

How can a country fight an ideology?

In each case, the paper’s author will seek to answer the question with the help of historical evidence, and in particular the use of analogies and comparisons. The conference is a joint venture between the Hoover Institution, the Axel and Margaret Ax:son Johnson Foundation, and the Belfer Center at Harvard’s Kennedy School. The conference papers will subsequently be published in a book with the title Applied History.

Organizers

Hoover Institution, Stanford University: With its eminent scholars and world-renowned Library and Archives, the Hoover Institution seeks to improve the human condition by advancing ideas that promote economic opportunity and prosperity, while securing and safeguarding peace for America and all mankind.

The Belfer Center for Science and International Affairs, Harvard Kennedy School: The Belfer Center for Science and International Affairs is the hub of Harvard Kennedy School's research, teaching, and training in international security and diplomacy, environmental and resource issues, and science and technology policy. In 2017, for the fourth year in a row, the Belfer Center was ranked the world's #1 University Affiliated Think Tank by University of Pennsylvania's Think Tanks and Civil Societies Program.

Axel and Margaret Ax:son Johnson Foundation: The Axel and Margaret Ax:son Johnson Foundation is a private foundation whose principal objective is to facilitate scientific research in general. The foundation has in particular chosen to benefit the liberal arts and the social sciences. It was founded in 1947 by the late Consul General Axel Ax:son Johnson (1876-1958) together with his wife Margaret, owner of the Nordstjernan group.

2:15 – 3:00 PM Session 12: Defeating an Idea: What the Cold War Can Teach Us About How States Fight Ideologies
Presenter: Jeremy Friedman
Commentator: John Bew
Chair: Philip Zelikow

Ana Lucia Araujo: ALL-MALE HISTORY CONFERENCE: "ALL-MALE HISTORY CONFERENCE. This goes for the GUINNESS BOOK of the century! A team of 30 white male historians will discuss Applied History at @Stanford. What a shame..."

The Question of Larry Kudlow...tag:typepad.com,2003:post-6a00e551f08003883401bb09fbf9c6970d2018-03-16T09:17:37-07:002018-03-16T09:17:37-07:00There has long been discussion of whether Larry Kudlow believes what he says. (1) Is he one of the professional Republican commentators like Stephen Moore, James Glassman, and Kevin Hassett who knows that what he says is wrong, but says it because it is just a game—that feeding one's readers and viewers something that is not bullshit is simply not a goal, and telling the truth will serve when it does not conflict with one's goals? Or (2) is he just not aware of the world outside him, in the sense in which people are usually oriented toward reality? Well, why not both? Being unaware both that FICA is not a household-level but an earner-level tax and of the approximate size of the federal workforce when there is no upside to the falsehood seems to me conclusive evidence that there is a good deal of (2) going on. And maybe that gives him the freedom to be a more effective version of (1) than people who are more often clued in to how what they are saying is simply not true. I do see a sharp contrast between the Kudlow of the 1980s and the Kudlow I have run across...J. Bradford DeLong

There has long been discussion of whether Larry Kudlow believes what he says. (1) Is he one of the professional Republican commentators like Stephen Moore, James Glassman, and Kevin Hassett who knows that what he says is wrong, but says it because it is just a game—that feeding one's readers and viewers something that is not bullshit is simply not a goal, and telling the truth will serve when it does not conflict with one's goals? Or (2) is he just not aware of the world outside him, in the sense in which people are usually oriented toward reality?

Well, why not both? Being unaware both that FICA is not a household-level but an earner-level tax and of the approximate size of the federal workforce when there is no upside to the falsehood seems to me conclusive evidence that there is a good deal of (2) going on. And maybe that gives him the freedom to be a more effective version of (1) than people who are more often clued in to how what they are saying is simply not true.

I do see a sharp contrast between the Kudlow of the 1980s and the Kudlow I have run across since, say, 1992: the later Kudlow seems to know much less, and to have a much more difficult time figuring out that he needs to alter his range and rhythm whenever he is speaking to an audience that is neither Fox News viewers nor right-wing investors who are easy prey to affinity fraud...

...but a commitment to the cause of low taxes, particularly for high earners, that borders on theological. In the time that has passed since then, that grip has not weakened.... The appointment of Lawrence Kudlow as head of the National Economic Council indicates how firmly supply-siders control Republican economic policy, and how little impact years of failed analysis have had.... They likewise believe tax cuts are the necessary tonic for every economic circumstance. The purest supply-siders, like Kudlow, go further and deeper in their commitment. Kudlow attributes every positive economic indicator to lower taxes, and every piece of negative news to higher taxes. While that sounds absurd, it is the consistent theme he has maintained throughout his career as a prognosticator. It’s not even a complex form of kookery, if you recognize the pattern. It’s a very simple and blunt kind of kookery.

In 1993, when Bill Clinton proposed an increase in the top tax rate from 31 percent to 39.6 percent, Kudlow wrote:

There is no question that President Clinton’s across-the-board tax increases… will throw a wet blanket over the recovery and depress the economy’s long-run potential to grow...

This was wrong. Instead, a boom ensued. Rather than question his analysis, Kudlow switched to crediting the results to the great tax-cutter, Ronald Reagan:

The politician most responsible for laying the groundwork for this prosperous era is not Bill Clinton, but Ronald Reagan...

he argued in February, 2000. By December 2000, the expansion had begun to slow. What had happened? According to Kudlow, it meant Reagan’s tax-cutting genius was no longer responsible for the economy’s performance:

The Clinton policies of rising tax burdens, high interest rates and re-regulation is responsible for the sinking stock market and the slumping economy...

he mourned, though no taxes or re-regulation had taken place since he had credited Reagan for the boom earlier that same year. By the time George W. Bush took office, Kudlow was plumping for his tax-cut plan. Kudlow not only endorsed Bush’s argument that the budget surplus he inherited from Clinton—the one Kudlow and his allies had insisted in 1993 could never happen, because the tax hikes would strangle the economy—would turn out to be even larger than forecast:

Faster economic growth and more profitable productivity returns will generate higher tax revenues at the new lower tax-rate levels. Future budget surpluses will rise, not fall...

This was wrong, too.... Kudlow then began to relentlessly tout Bush’s economic program.... insist that the housing bubble that was forming was a hallucination.... He made this case over and over (“There’s no recession coming. The pessimistas were wrong. It’s not going to happen. At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). Goldilocks is alive and well. (The Bush boom is alive and well.”) and over (“The Media Are Missing the Housing Bottom,” he wrote in July 2008). All of this was wrong. It was historically, massively wrong.

When Obama took office, Kudlow was detecting an “inflationary bubble.” That was wrong. He warned in 2009 that the administration “is waging war on investors. He’s waging war against businesses. He’s waging war against bondholders. These are very bad things.” That was also wrong, and when the recovery proceeded, by 2011, he credited the Bush tax cuts for the recovery. (Kudlow, April 2011: “March unemployment rate drop proof lower taxes work.”) By 2012, Kudlow found new grounds to test out his theories: Kansas, where he advised Republican governor Sam Brownback to implement a sweeping tax-cut plan that would produce faster growth. This was wrong. Alas, Brownback’s program has proven a comprehensive failure, falling short of all its promises and leaving the state in fiscal turmoil...

...Nonetheless I can't help but wonder if he might feel a faint touch of a related emotion when he considers this 2005 offering, "The Housing Bears Are Wrong Again":

Homebuilders led the stock parade this week with a fantastic 11 percent gain. This is a group that hedge funds and bubbleheads love to hate. All the bond bears have been dead wrong in predicting sky-high mortgage rates. So have all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Florida, to bring down the consumer, the rest of the economy, and the entire stock market.

None of this has happened. The Federal Reserve has effectively mopped up excess cash and calmed inflation expectations. That’s why bond rates are hovering around 4 percent, with most mortgage rates about a point higher.

Meanwhile, the homebuilders index has increased 76 percent over the past year, with particularly well-run companies like Toll Brothers up about twice as much. The bubbleheads missed all this because they haven’t done their homework. If they had put a little elbow grease into their analysis, they would have learned that new-housing starts for private homes and apartments haven’t changed much during the past three and a half decades....

Since 1997 home prices have been increasing at a 6.5 percent pace on a yearly basis, with a 12 percent gain over the past year. In contrast, stock prices have gained only 3 percent yearly during the same period. Simply, real estate has had the tax-advantage over stocks as an investment vehicle. There is no $500,000 per family tax-free capital gain for shares, nor are the borrowing costs for the purchase of stocks tax-deductible....

Which leads to a final thought: Why not apply the same tax laws that have benefited home owners to stock market investors and home buyers? If this were to come about, even more wealth would be created in America, leading to even more new business and job creation.

Tax reform to create a level playing field could boost our economy’s potential to grow beyond almost anyone’s wildest dreams. Homeownership, stock ownership, and small business ownership should be taxed at the same minimal rates as they are all key components of economic growth and wealth creation.

Uncapping the payroll tax reveals still another cultural misstep by Sen. Obama. He apparently has a difficult time understanding that nowadays, a veteran fireman or a veteran cop, married to a veteran schoolteacher, will make well over 100,000. In fact, they can make close to
200,000. Yet Obama still wants to go ahead and tax both the first and last payroll dollar of this group at a very high marginal tax rate by uncapping the Social Security (FICA) tax.

The FICA cap is an individual cap, unaffected by income earned/payroll taxes paid by your spouse.

...I appeared on Larry Kudlow’s show last night and we had a bit of a tussle about how much deficit reduction could be achieved by cutting federal salaries. Larry argued that a 5-10% pay cut for federal civilian employees like that imposed by Ireland could have a major impact on the federal budget deficit. (Larry was greatly influenced by this WSJ oped.) I had come prepared to talk about a different subject, and so didn’t have the relevant figures at hand, but I suggested that his math sounded incredible. Looking it up this morning, it IS incredible.... Even if we fired every single federal civil servant and shuttered the entire non-defense federal government, three-fourths of the budget deficit would still be with us. Does this really come as news to Larry Kudlow, a very smart man and a former deputy to David Stockman at the Office of Management and Budget?

...but I find him good-humored and courteous, and it’s always worth talking to people who aren’t already convinced of your point of view. And, to his credit, he makes it a point to have a lot of people who don’t agree with him on his show.

What I don’t understand is how, given all his exposure to sincere people who think differently than he does, Kudlow’s mental model for disagreement ends up being so ideologically skewed. I was on last night to talk about the Obama administration’s resistance to a tax holiday for the profits American corporations are holding overseas.... Michael Mundaca... [argues] our previous experiment with a corporate tax holiday didn’t pan out.... You can disagree with Mundaca’s take, but you don’t need to ask Dr. Strange to summon a demon in order to interpret it. Bloomberg Business Week — not exactly a publication known for its aggressively anti-business leanings—ran a cover story this week making almost exactly the same argument. In that cover story, a dozen respected tax economists provided support for the position. But that’s not how Kudlow saw it. “I believe they want to punish international business,” he said. A few minutes later: “I’m suspecting that Team Obama just doesn’t want to help the foreign earnings of companies.” And then: “I think they do have an ideological bias against business.”...

[Y]ou see this a lot. Somehow, people find it preferable to think the president of the United States a socialist, Marxist or Kenyan anti-colonialist than a guy who agrees with Mitt Romney’s 2005 health-care opinions rather than Mitt Romney’s 2011 health-care opinions. I won’t even get into Glenn Beck’s take on the administration’s motivations, as even on the Internet, I don’t have the space. But you end up with these winding, esoteric theories to explain perfectly common policy preferences and political decisions. It’s really weird.

(2011): Inside the Mind of Larry Kudlow...: "
One oldtime Washington hand who has spent a lot of time working with James "Dow 36000" Glassman claims that for Glassman it is simply a game: Glassman thinks his job is not to say what he thinks is true but rather what the audience he is cultivating wants to hear from him. The two times I have been on the same stage as Kudlow have made me think that the same is true of Kudlow: he is too smart to have meant some of the things he said, or to have actually thought that the other people on the panel had said what Kudlow claimed they had said.

...as estimated by the National Income and Product Accounts and statistical estimates of the change in total measured household net worth:

There is a gap between the rate of return on the average investment made in a year and the cost of capital, which means that 1 dollar of savings on average produces more than 1 of value.

The NIPA may well understate corporate savings and investment by counting a bunch of investments in organizational form as corporate operating expenses.

All of us free-ride on technological research and development, reaping where we do not sow, gathering where we do not scatter, and profiting where we do not save and invest.

Shifts in the distribution of income away from labor and toward capital increase measured household net worth—which includes the increased expected future profits from capital—but not true household net worth—which also includes the decreased expected future wages of labor.

Declines in interest rates make the future more valuable relative to the present and so raise measured household net worth today—which is measured in today's dollars—without any outward shift in the true consumption-possibilities frontier.

Government deficits that raise the debt lower national savings but not measured household net worth.

Good news about the future produces windfall gains and bad news windfall losses which alter this year's household net worth without telling us much about over-all long-run accumulation trends.

I was sitting on the right end of an nine-person panel at the New School... http://www.cepa.newschool.edu/events/events_schwartz-lecture.htm#. Bob Solow was sitting on the left end—Solow, Shapiro, Schwartz, Rohatyn, Kudlow, Kerrey, Kosterlitz, Hormats, DeLong. Bob Solow expressed concern and worry over the declines in the U.S. savings rate over the past generation. Larry Kudlow, in the middle of the panel, aggressively launched into a rant—about how the NIPA savings rate was wrong, about how the right savings rate was the change in household net worth, about how there was no potential problem with America saving too little, that the economy was strong, and that that day's employment report had been wonderful, and that Paul Krugman had predicted nine out of the last zero recessions, et cetera, et cetera, et cetera.

What is one to do? You watch a guy—Bob Solow—one of the smartest and most thoughtful people I know, having his intellectual impact neutralized by a guy—Kudlow—who really isn't in the intellectual inquiry business anymore. Kudlow clearly has not thought through the biases and gaps in the household net worth number: if he had, there is no way he could say what he is saying.

On paper, in print, on the screen, one can point out that the employment report was anemic—it was not a bloodletting by any means, but it was a bit disappointing.

On paper, in print, on the screen, one can say that there is reason to worry about the decline in housing demand and the possibility that it might trigger a recession.

On paper, in print, on the screen one can say that reasons (4), (5), and (6) pushing up measured household net worth are reasons to discount that statistic as misleading because they do not reflect any true increase in appropriately-defined wealth, that any increase in household net worth caused by (7) is a transitory phenomenon that tells us little about permanent saving and accumulation patterns, that (1) and (2) affect the level but not the trends of saving, and do not speak to Solow's worry about the savings-investment rate's decline, and thus that only reason (3)—the effects of the now decade-long computer-and-communications real investment boom on our total wealth—provides a reason to even begin to think about whether Bob Solow's worries about declining savings as measured by the NIPA are at all overblown.

But there are ninety minutes for a panel with nine people on it. To the audience it looks like two cocksure economists who disagree for incomprehensible reasons. And my ten minute share will come too late to try to referee Solow-Kudlow in any fair, balanced, and effective way.

It's an anti-discourse situation: Kudlow doesn't acknowledge—may not know—the flaws in his chosen statistic. And I can't help wonder what Kudlow would be saying if a Democrat were president.

It's an intellectual Gresham's Law in action...

What can I do? I can blog about it.

Trump’s Tax on America: Fresh at Project Syndicatetag:typepad.com,2003:post-6a00e551f08003883401b8d2e1f328970c2018-03-12T14:21:42-07:002018-03-12T14:21:42-07:00**Project Syndicate**: [Trump’s Tax on America](https://www.project-syndicate.org/commentary/trump-tariffs-on-steel-aluminum-by-j--bradford-delong-2018-03): "After a year of serving as a useful idiot for congressional Republicans and their wealthy donors to push through tax cuts and deregulation, US President Donald Trump is now following through on his protectionist promises. Sooner or later, Republicans might realize that inept kleptocracy is not the best form of government after all. Mitch McConnell, the US Senate’s Republican Majority Leader, recently proclaimed that “2017 was the best year for conservatives in the 30 years that I’ve been here,” not least because President Donald Trump’s administration “has turned out to be … very solid, conservative, right of center, pro-business.” One would undoubtedly hear Republican donors express similar sentiments over their shrimp hors d’oeuvres. After all, the Trump administration has rolled back environmental regulations and cut taxes for the rich. What’s not to like?... [Read MOAR at Project Syndicate](https://www.project-syndicate.org/commentary/trump-tariffs-on-steel-aluminum-by-j--bradford-delong-2018-03)J. Bradford DeLong

Project Syndicate: Trump’s Tax on America: "After a year of serving as a useful idiot for congressional Republicans and their wealthy donors to push through tax cuts and deregulation, US President Donald Trump is now following through on his protectionist promises. Sooner or later, Republicans might realize that inept kleptocracy is not the best form of government after all.

Mitch McConnell, the US Senate’s Republican Majority Leader, recently proclaimed that “2017 was the best year for conservatives in the 30 years that I’ve been here,” not least because President Donald Trump’s administration “has turned out to be … very solid, conservative, right of center, pro-business.” One would undoubtedly hear Republican donors express similar sentiments over their shrimp hors d’oeuvres. After all, the Trump administration has rolled back environmental regulations and cut taxes for the rich. What’s not to like?... Read MOAR at Project Syndicate

Econ 113: Spring 2018: Problem Set 2: Who Benefitted from Slavery? DRAFTtag:typepad.com,2003:post-6a00e551f08003883401b8d2dff622970c2018-03-12T13:20:56-07:002018-03-12T05:55:51-07:001. Read this webpage: 2. Chase the link to the handout and read it: 3. Print out and to the problem set at: ---- Who profited from North American slavery before the Civil War? Ask a historian, or a political scientist, or a politician the question, “Who benefited from North American slavery?” and the answer you will probably get is, “The slaveholders, of course. The slaveholders got to work their slaves hard, pay them little, sell what they made for healthy prices, and get rich." We economists have a different view... We economists think seriously about the real long-run "incidence" of events and processes. We economists think historians, political scientists, historians, and all others should take microeconomics to learn about incidence--and then take it again. What's our take on the beneficiaries of North American slavery before the Civil War? Three groups gained the most: 1. Those slaveholders who owned slaves when it became clear that Cotton would be King--that the British industrial revolution was producing an extraordinary demand for this stuff and that Eli Whitney’s cotton gin meant that it could be produced cheaply--profited immensely as the prices of the slaves they owned rose. 2. Consumers of machine-made cotton textiles,...J. Bradford DeLong

Ask a historian, or a political scientist, or a politician the question, “Who benefited from North American slavery?” and the answer you will probably get is, “The slaveholders, of course. The slaveholders got to work their slaves hard, pay them little, sell what they made for healthy prices, and get rich."

We economists have a different view...

We economists think seriously about the real long-run "incidence" of events and processes. We economists think historians, political scientists, historians, and all others should take microeconomics to learn about incidence--and then take it again.

What's our take on the beneficiaries of North American slavery before the Civil War? Three groups gained the most:

Those slaveholders who owned slaves when it became clear that Cotton would be King--that the British industrial revolution was producing an extraordinary demand for this stuff and that Eli Whitney’s cotton gin meant that it could be produced cheaply--profited immensely as the prices of the slaves they owned rose.

Consumers of machine-made cotton textiles, from peasants in Belgium able for the first time to buy a rug to London carters to Midwestern pioneers who found basic clothing the only cheap part of equipping a covered wagon, probably profited the most in aggregate.

Northern and western Americans whose taxes were lower because of the tariffs collected on imports of goods financed by cotton exports profited as well.

Harold Macmillan: "Greeks to Their Romans...": Document: On the Twentieth Century Imperial Successiontag:typepad.com,2003:post-6a00e551f08003883401bb09fadcff970d2018-03-12T10:57:45-07:002018-03-12T10:59:17-07:00**D.R. Thorpe**: [Supermac: The Life of Harold Macmillan](https://play.google.com/store/books/details?id=lzVgMHMwZtwC) >[Harold] Macmillan dubbed Roosevelt ‘The Emperor of the West’, and Churchill ‘The Emperor of the East’. When Eisenhower paid court to Roosevelt, Macmillan said to Bob Murphy, ‘Isn’t he just like a Roman centurion?’ The classical analogy famously went further. To Dick Crossman, Director of Psychological Warfare at AFHQ, he said: >>We, my dear Crossman, are Greeks in this American empire. You will find the Americans much as the Greeks found the Romans – great big vulgar, bustling people, more vigorous than we are and also more idle, with more unspoiled virtues, but also more corrupt. We must run A.F.H.Q. as the Greeks ran the operations of the Emperor Claudius... The source Thorpe gives for this quote is the _Sunday Telegraph_ for February 9, 1964. Anybody found a longer description? Not in the biographies, and library does not seem to have Crossman's _Backbench Diaries_... ---- ---- **Thorpe**: >On 22 December, Macmillan was summoned to Downing Street. It was one of the turning points of his life. Churchill outlined the complex situation obtaining in North Africa. Macmillan’s importance, he emphasised, would lie in the relationship he could build up with Eisenhower… >As Macmillan...J. Bradford DeLong
<div xmlns="http://www.w3.org/1999/xhtml"><p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401bb09fadcd4970d-pi" alt="File Allied leaders in the Sicilian campaign jpg Wikipedia" title="File_Allied_leaders_in_the_Sicilian_campaign_jpg_-_Wikipedia.png" border="0" width="750" height="251" /></p>
<p><strong>D.R. Thorpe</strong>: <a href="https://play.google.com/store/books/details?id=lzVgMHMwZtwC">Supermac: The Life of Harold Macmillan</a></p>
<blockquote>
<p>[Harold] Macmillan dubbed Roosevelt ‘The Emperor of the West’, and Churchill ‘The Emperor of the East’. When Eisenhower paid court to Roosevelt, Macmillan said to Bob Murphy, ‘Isn’t he just like a Roman centurion?’ The classical analogy famously went further. To Dick Crossman, Director of Psychological Warfare at AFHQ, he said:</p>
<blockquote>
<p>We, my dear Crossman, are Greeks in this American empire. You will find the Americans much as the Greeks found the Romans – great big vulgar, bustling people, more vigorous than we are and also more idle, with more unspoiled virtues, but also more corrupt. We must run A.F.H.Q. as the Greeks ran the operations of the Emperor Claudius...</p>
</blockquote>
</blockquote>
<p>The source Thorpe gives for this quote is the <em>Sunday Telegraph</em> for February 9, 1964. Anybody found a longer description? Not in the biographies, and library does not seem to have Crossman's <em>Backbench Diaries</em>...</p>
<hr />
<p><a href="https://www.icloud.com/keynote/0IhgSjKDwAyUE6DLH-1VzyklA">https://www.icloud.com/keynote/0IhgSjKDwAyUE6DLH-1VzyklA</a></p>
<hr />
<p><strong>Thorpe</strong>:</p>
<blockquote>
<p>On 22 December, Macmillan was summoned to Downing Street. It was one of the turning points of his life. Churchill outlined the complex situation obtaining in North Africa. Macmillan’s importance, he emphasised, would lie in the relationship he could build up with Eisenhower…</p>
</blockquote>
<p>&nbsp;</p>
<blockquote>
<p>As Macmillan prepared to travel to North Africa, Churchill telegraphed Roosevelt. ‘He will be, I am sure, a help. He is animated by the friendliest feelings towards the United States, and his mother hails from Kentucky’…</p>
</blockquote>
<p>&nbsp;</p>
<blockquote>
<p>For Macmillan who, 12 months earlier, had been occupying a minor post in the Colonial Office, sending out memoranda about the Yeast Company of Jamaica, the opportunities in North Africa were an extraordinary transformation. He may not have been an Octavius Caesar, but he could lay fair claim to being a Maecenas or an Agrippa…</p>
</blockquote>
<p>&nbsp;</p>
<blockquote>
<p>Macmillan’s… task was fourfold…</p>
<ol>
<li>Oil the wheels of the Anglo-American relationship at Allied headquarters…</li>
<li>Serve as an informal head to the British civilian officials in Algiers…</li>
<li>Act as the representative of His Majesty’s Government, dealing with the French. In this, his most important function was to persuade American colleagues, both civilian and military, to accept British thinking and policy regarding the French, and the eventual elevation of de Gaulle into the position of a de facto prime minister…</li>
<li>Deal with Italian questions… as the Allied forces invaded Sicily and then pushed northwards through the Italian mainland.</li>
</ol>
<p>Persuade the Commander-in-Chief, General Eisenhower, of the wisdom of the policy of His Majesty’s Government in the course of fulfilling those responsibilities…</p>
</blockquote>
<p>&nbsp;</p>
<blockquote>
<p>Macmillan met Eisenhower… on…2 January.… ‘Considering that neither Washington or London had informed him of my appointment (which one of his staff heard by chance on the radio),’ Macmillan wrote home to Dorothy, ‘the interview was quite a success.’</p>
<p>It did not seem so at the outset. Eisenhower bluntly asked Macmillan who he was, and what he was going to do. Macmillan explained that he was to liaise between AFHQ and Churchill, but at present was not <em>au fait</em> with all the political problems. Eisenhower told him that he would have plenty to learn. In any case, Eisenhower said, Hal Mack was a wholly satisfactory liaison officer. </p>
<p>Seeking some kind of common ground, as the interview began to wind down dishearteningly, Macmillan asked Eisenhower if he knew his mother’s home state. Eisenhower, thinking Macmillan meant an English county, did not see how he could possibly be expected to know it. Macmillan then explained that his mother had been born in the town of Spencer in Indiana.</p>
<p>From that moment the tone of the meeting changed. Even though Eisenhower did not treat Macmillan as an equal, even as a British minister of Cabinet rank, he thereafter regarded him as a kinsman…</p>
</blockquote>
<hr />
<h3>The Grand Strategy of the British Empire for Superpower Succession</h3>
<p>From 1830 to 1900, Britain could out-manufacture any likely coalition of its European enemies. By 1913, that was no longer true—Britain was just one of many projecting power across the globe. Would the 20th Century be a British, a German, or a Russian century? The British Empire preferred that it be a British century, but it was not all-powerful.</p>
<p>In 1800, the U.S. was a developing country—the near-plaything of the superpowers Britain and France. By 1870, the U.S. was a “power”—with an army, a navy, and an industrial base to support them—but unable to project that power south of Mexico City or east of the Bahamas.</p>
<p>Nevertheless, there was a shift of Britain’s strategy toward the U.S. starting in the 1840s:</p>
<ul>
<li>Unusually: making a deal with the U.S. over the Oregon Territory—a deal that gives the U.S. what is now Washington state and part of Idaho, which were British settled. (The usual British negotiating strategy would have been to send the gunboats to burn the U.S.'s capital, and then dictate terms.)</li>
<li>Cultural and economic contact: Rhodes Scholarships, dukes marrying the daughters of plutocrats, massive investment in U.S. industrial development.</li>
<li>One often-expressed hope was to find a way to bind together the English-speaking countries:
<ul>
<li>Maybe the U.S. would outsource foreign policy to the Mother Country?</li>
<li>At least a “special relationship”</li>
</ul></li>
</ul>
<p>This was very important. By 1913, the U.S. was a <em>potential</em> superpower. By 1939, the U.S. was <em>the</em> superpower:</p>
<p>&nbsp;</p>
<p><strong>Population: U.S. vs. British Empire (“European”)</strong>:</p>
<p>1800: 4 vs. 17 <br />
1840: 13 vs. 28 <br />
1870: 33 vs. 37 <br />
1913: 83 vs. 59—largely due to the great wave of immigration</p>
<p>&nbsp;</p>
<p><strong>Manufacturing: U.S. as a percentage of British Plus Dominions</strong>:</p>
<p>1860: 30% <br />
1880: 60% <br />
1900: 100% <br />
1913: 175% <br />
1929: 300%</p>
</div>
The Time Series Figures for the Most Basic of Business Cycle Macro Analyses: What Is to Be Explained and Accounted Fortag:typepad.com,2003:post-6a00e551f08003883401b7c9573cd6970b2018-03-11T07:17:32-07:002018-03-11T09:40:29-07:00### National Income and Components **Real GDP**: **Real GDP per Worker**: ---- ### National Income Components as Shares of Potential GDP **Investment as a Share of Potential GDP**: **Consumption as a Share of Potential GDP**: **Gross Exports as a Share of Potential GDP**: **Imports as a Share of Potential GDP**: **Net Exports as a Share of Potential GDP**: ---- ### Monetary **Price Level**: **Inflation Rate**: ---- ### Interest and Exchange Rates **Nominal Short-Term Safe Rate**: **Long-Term Real Safe Rate**: **Long-Term Real Risky Rate: **Real Exchange Rate** (Value of Foreign Goods/Currency): ---- ---- ---- ### Notes on Figures Real GDP * Real GDP: labor productivity times employment * The principal aspect of this graph is long-run growth: the American economy today is eight times the size of the economy of 1950 * 2.5 times as many workers * 3.1 times output per worker * The secondary aspect is the business cycle * The tertiary aspect is speedup and slowdown in the growth trend Real GDP per Worker * Real GDP per worker (in 2009 dollars) was $45,000 per year in 1950 and is $115,000 today * Note the productivity growth speedup of the mid-1990s * And note the productivity growth collapse...J. Bradford DeLong
<div xmlns="http://www.w3.org/1999/xhtml"><h3>National Income and Components</h3>
<p><strong>Real GDP</strong>: </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXfV&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<p><strong>Real GDP per Worker</strong>: </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXfS&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<hr />
<h3>National Income Components as Shares of Potential GDP</h3>
<p><strong>Investment as a Share of Potential GDP</strong>: </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXg2&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<p><strong>Consumption as a Share of Potential GDP</strong>: </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXjz&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<p><strong>Gross Exports as a Share of Potential GDP</strong>:</p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXjP&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<p><strong>Imports as a Share of Potential GDP</strong>: </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXjS&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<p><strong>Net Exports as a Share of Potential GDP</strong>: </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXkr&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<hr />
<h3>Monetary</h3>
<p><strong>Price Level</strong>: </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXlj&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<p><strong>Inflation Rate</strong>:</p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXlz&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<hr />
<h3>Interest and Exchange Rates</h3>
<p><strong>Nominal Short-Term Safe Rate</strong>: </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXm5&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<p><strong>Long-Term Real Safe Rate</strong>: </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXmd&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<p>**Long-Term Real Risky Rate: </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iYOt&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<p><strong>Real Exchange Rate</strong> (Value of Foreign Goods/Currency): </p>
<iframe src="//fred.stlouisfed.org/graph/graph-landing.php?g=iXml&width=600&height=600" scrolling="no" frameborder="0" style="overflow:hidden; width:600px; height:650px;" allowTransparency="true"></iframe>
<p></p>
<hr />
<p><a href="https://www.icloud.com/keynote/0RKCnJXmJVfA6-NlgZEP-CD7w">https://www.icloud.com/keynote/0RKCnJXmJVfA6-NlgZEP-CD7w</a></p>
<p><a href="http://www.bradford-delong.com/2018/03/time-series-for-the-most-basic-of-business-cycle-macro-models-what-is-to-be-understood.html">http://www.bradford-delong.com/2018/03/time-series-for-the-most-basic-of-business-cycle-macro-models-what-is-to-be-understood.html</a></p>
<hr />
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b7c95742fa970b-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b7c957430a970b-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b8d2e19062970c-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b7c9574326970b-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b8d2e19074970c-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b8d2e19103970c-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401bb09fa890b970d-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401bb09fa890f970d-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b8d2e19094970c-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401bb09fa891e970d-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b8d2e190a5970c-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401bb09fa892d970d-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b7c9574343970b-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401bb09fa8934970d-pi" alt="NewImage" title="NewImage.png" border="0" width="720" height="540" /></p>
<hr />
<h3>Notes on Figures</h3>
<p>Real GDP</p>
<ul>
<li>Real GDP: labor productivity times employment</li>
<li>The principal aspect of this graph is long-run growth: the American economy today is eight times the size of the economy of 1950
<ul>
<li>2.5 times as many workers</li>
<li>3.1 times output per worker</li>
</ul></li>
<li>The secondary aspect is the business cycle</li>
<li>The tertiary aspect is speedup and slowdown in the growth trend</li>
</ul>
<p>&nbsp;</p>
<p>Real GDP per Worker</p>
<ul>
<li>Real GDP per worker (in 2009 dollars) was $45,000 per year in 1950 and is $115,000 today</li>
<li>Note the productivity growth speedup of the mid-1990s</li>
<li>And note the productivity growth collapse since 2000</li>
</ul>
<p>&nbsp;</p>
<p>Investment Spending as a Share of Potential GDP</p>
<ul>
<li>The major driver of the business cycle is fluctuating investment spending</li>
<li>This is investment spending as a share of potential GDP</li>
<li>In our simple macro model, I/Y&star; </li>
<li>These waves are the business cycles</li>
<li>Note the anemic investment recovery of 2009-present</li>
</ul>
<p>&nbsp;</p>
<p>Personal Consumption Expenditures as a Share of Potential GDP</p>
<ul>
<li>In the language of our simple macro model, this is C/Y&star;</li>
<li>When Y is low relative to Y&star;, C/&star; is low as well</li>
<li>C/Y&star; was low in the business cycle troughs of 2009, 1992, 1982, 1975, 1970, 1960, etc.</li>
<li>The medium-term rise in C/Y&star; as the U.S. becomes a save-and-invest-less country</li>
</ul>
<p>&nbsp;</p>
<p>Gross Exports</p>
<ul>
<li>Demand for U.S. exports has risen massively since 1950: from 5% to 13% of national income and product</li>
<li>When the value of foreign currency/bonds is high, exports boom</li>
<li>When the value of foreign currency/goods is low, exports are depressed</li>
</ul>
<p>&nbsp;</p>
<p>Gross Imports</p>
<ul>
<li>Imports have risen from 4% to 16% of national income and product since 1950</li>
<li>“Globalization” and “hyperglobalization”
<ul>
<li>The coming of the container ship</li>
<li>The tripling of world oil prices in the 1970s a big moment</li>
<li>As is the great expansion of world trade with the coming of the internet
<ul>
<li>Value chains</li>
<li>The China shock</li>
</ul></li>
</ul></li>
</ul>
<p>&nbsp;</p>
<p>The Trade Balance</p>
<ul>
<li>Net exports are a balancing item: you have to add them to C+I+G to get total spending on domestically-produced goods</li>
<li>The high interest rates of the 1980s that drove the value of foreign currency up led to a large negative swing in net exports</li>
<li>So did the optimism about America of the dot-com boom, and the so-called “strong dollar policy”</li>
<li>Most of all, however, the medium-term shift in the trade balance is due to the savings shortfall
<ul>
<li>Largely induced by large government deficits</li>
</ul></li>
</ul>
<p>&nbsp;</p>
<p>Short-Term Safe Nominal Interest Rate: Treasury Bills</p>
<ul>
<li>The interest rate the Federal Reserve can nail: the short-term safe nominal interest rate</li>
<li>Note the regular cycles as the Federal Reserve tries to “lean against the wind”</li>
<li>Note the impact of the inflationary wave of the 1970s on the Treasury bill rate the Fed thought was appropriate</li>
<li>Note the extended time at the zero lower bound in the 2010s</li>
</ul>
<p>&nbsp;</p>
<p>Long-Term Safe Real Interest Rate</p>
<ul>
<li>Subtract the current inflation rate and add on the term premium—the difference between the 3-mo. T-bill and the 10-yr. T-bond rate—and get what current and expected future Federal Reserve policy have on incentives for investment</li>
<li>Note the:
<ul>
<li>Substantial tightening of the early 1970s</li>
<li>Loosening of the mid 1960s</li>
<li>Volcker disinflation of the early 1980s</li>
<li>The Greenspan preemption of the mid 1990s</li>
<li>The great easing of policy at the end of the 2000s</li>
</ul></li>
</ul>
<p>&nbsp;</p>
<p>Long-Term Risky Real Interest Rate</p>
<ul>
<li>But the interest rate that actually matters for the determination of investment is the long-term real risky interest rate</li>
<li>The safe rate plus the risk premium assigned by financial markets</li>
<li>See the sharp tightenings coming from Federal Reserve policy and the financial system in:
<ul>
<li>the late 2000s, </li>
<li>the early 1980s, and</li>
<li>the early 1970s</li>
</ul></li>
</ul>
<p>&nbsp;</p>
<p>Real Exchange Rate</p>
<ul>
<li>Dollar pegged to other currencies under the Bretton Woods system until the early 1970s</li>
<li>Since then, three major dollar cycles</li>
<li>Exports drop (and manufacturing hammered) when the value of foreign currency/goods falls
<ul>
<li>Reagan deficits</li>
<li>Internet/China</li>
<li>“Taper tantrum”</li>
<li>Trumpenomics</li>
</ul></li>
</ul>
<p>&nbsp;</p>
<p>Price Level</p>
<ul>
<li>Headline and core</li>
<li>Cumulative and compounded 7.5-fold inflation since 1950
<ul>
<li>Consumer prices today 2.5 times what they were in 1984</li>
<li>Consumer prices in 1950 1/3 what they were in 1984</li>
</ul></li>
<li>2.5% per year</li>
</ul>
<p>&nbsp;</p>
<p>Inflation Rate</p>
<ul>
<li>Consumer Price Index
<ul>
<li>Not PCE…</li>
</ul></li>
<li>“Headline” and “core”
<ul>
<li>Current core a better forecast of future headline than current headline is</li>
</ul></li>
<li>Korean War </li>
<li>Mid-50s to late 60s</li>
<li>The 70s inflation</li>
<li>“Opportunistic” disinflation</li>
<li>The era of the zero lower bound</li>
</ul>
</div>
The Future of Worktag:typepad.com,2003:post-6a00e551f08003883401bb09f8b257970d2018-03-04T16:39:43-08:002018-03-04T16:39:43-08:00---- ----J. Bradford DeLong

Who Is Less Witfull Here?: Monday Smackdowntag:typepad.com,2003:post-6a00e551f08003883401bb09c3c854970d2018-02-26T16:29:53-08:002018-02-26T16:29:34-08:00Where did Trump's 6% growth number from last fall come from? I really think we can blame the once-smart and now amazingly witless John Cochrane for this one: it's the only place I can find that somebody talking to Trump might have read that claims 6%/year growth: **John Cochrane** (2016): [The Grumpy Economist: WSJ growth oped—full version](https://johnhcochrane.blogspot.com/2016/06/wsj-growth-oped-full-version.html): "Following the fitted line in the chart, Frontier generates $163,000 of income per capita, 209% better than the U.S., or 6% additional annual growth for 20 years..." **Robert Schroeder** (2017): [Trump tells lawmakers tax plan could lead to 6% growth](http://www.marketwatch.com/story/trump-tells-lawmakers-tax-plan-could-lead-to-6-growth-irs-shares-info-with-special-counsel-in-russia-probe-2017-09-27): "President Donald Trump... told a group of lawmakers that the tax framework he’s unveiling Wednesday could lead the U.S. economy to grow more than 6% a year.... That’s more than double what even Trump’s advisers had hoped for..."J. Bradford DeLong

Where did Trump's 6% growth number from last fall come from? I really think we can blame the once-smart and now amazingly witless John Cochrane for this one: it's the only place I can find that somebody talking to Trump might have read that claims 6%/year growth:

Robert Schroeder (2017): Trump tells lawmakers tax plan could lead to 6% growth: "President Donald Trump... told a group of lawmakers that the tax framework he’s unveiling Wednesday could lead the U.S. economy to grow more than 6% a year.... That’s more than double what even Trump’s advisers had hoped for..."

Rereading Phil Hoffman: Why Did Europe Conquer the World?tag:typepad.com,2003:post-6a00e551f08003883401bb09f6d2e0970d2018-02-26T14:20:52-08:002018-02-26T14:20:52-08:00**Rereading**: **Philip Hoffman: Why Did Europe Conquer the World?** From the best review of the book: **Dietz Vollrath** (2015) [Dumb Luck in Historical Development][]: >Philip Hoffman’s _Why Did Europe Conquer the World?_ [is]... on its face, is another entry in a long line of... Western European... dominance... due to a rather specific characteristic: disease tolerance, or cows, or a knobbly coastline.... But Hoffman’s work is different... a model of learning-by-doing in gunpowder technology... only... if you actually fight.... Europe['s]... lead was not due to some unique European characteristic, but rather was luck of the draw.... Hoffman... saw a correlation between European states and higher firepower, but... was willing to accept that this correlation--while meaningful in giving Europe an advantage--did not necessarily imply some kind of deep structural advantage for Europe... [Dumb Luck in Historical Development]: https://growthecon.wordpress.com/2015/08/12/dumb-luck-in-historical-development/ ---- **Six Orienting Questions for the Book as a Whole:** 1. This book is a "key link" argument: what is the key link here? 2. This book is a "key link" argument: does anybody have any business making a "key link" argument at book length? 3. As of 1550, the three most effective gunpowder empires at mustering the resources of societal power were all...J. Bradford DeLong

Philip Hoffman’s Why Did Europe Conquer the World? [is]... on its face, is another entry in a long line of... Western European... dominance... due to a rather specific characteristic: disease tolerance, or cows, or a knobbly coastline.... But Hoffman’s work is different... a model of learning-by-doing in gunpowder technology... only... if you actually fight.... Europe['s]... lead was not due to some unique European characteristic, but rather was luck of the draw.... Hoffman... saw a correlation between European states and higher firepower, but... was willing to accept that this correlation--while meaningful in giving Europe an advantage--did not necessarily imply some kind of deep structural advantage for Europe...

Six Orienting Questions for the Book as a Whole:

This book is a "key link" argument: what is the key link here?

This book is a "key link" argument: does anybody have any business making a "key link" argument at book length?

As of 1550, the three most effective gunpowder empires at mustering the resources of societal power were all in the Islamic ekumene: The Ottoman, the Safavid, and the Gurkhani (Mughal) Empires. Plus there was Ming China. Would any of Hoffman's retrospective argument have been visible in 1550?

In Hoffman's view, was the dominant power bound to be Britain--or were the differences between it and other European powers in the degree to which its fiscal-military state could mobilize resources small?

What is Hoffman's guess as to why it was only Western Europe that welded together commercial, military, imperial, and tax-based resource extraction interests to such an extraordinary degree? Gunpowder and practice in using it, yes, but what else?

Not modes of production, or modes of domination, but rather modes of interstate politico-military competition are at the core of Hoffman's argument. What do we think of this unusual division into "superstructure" and "base"?

Going through the book...

Introduction: Are "disease" and "gunpowder" really the only "standard" answers to the question of why Europe was so able to project power from 1490-1945? And was the European political-military cockpit from 1350 on really a winner-take-all tournament?

The Tournament in Early Modern Europe Made Conquest Possible: Why was the negative glory of losing a war not a major status insult to European monarchs. The 1998 movie about 16th-century English monarch Elizabeth I Tudor has her saying: "I do not like wars. They have uncertain outcomes..." That was what she believed. Why did so few of her peers think like she did? In Hoffman's view, all of relentless and expensive fighting focused around gunpowder technologies easily copied were necessary for the tournament's logic to roll forward. Focus, however, on the "easily copied" part. Shouldn't that alone have robbed Europe of its technological edge?

Why the Rest of Eurasia Fell Behind: For which Eurasian powers--Ming and Qing China, pre-Tokugawa and Tokugawa Japan, the Osmanli Sultanate, the Gurkhani (Moghul) Empire, and the Rurik-Romanovs--does Hoffman's argument work best? For which does it work less well?

Ultimate Causes: Is there a reason for the absence of a European politico-military hegemon in the early modern period? Why the fragmentation of Western Europe--and stable fragmentation at that?

Gunpowder and Private Expeditions: Private initiative in conquest is found not just in the conquistadores and their Dutch, French, and British imitators, but among ghazis, crusaders, and vikings as well: is there a distinction here that Hoffman can maintain? Note Hoffman's survival-of-the-southern-Song counterfactual...

Technology and Armed Peace in 19th Century Europe: The biggest Western European edge emerges after 1815--after they stop fighting each other. Why doesn't Hoffman think that this is a decisive point against his theory?

Conclusion: The Price of Progress: This chapter seems mostly a digression, focused on what Hoffman calls the Allen, Findlay, O'Rourke, and O'Brien argument. What does Hoffman say this argument is? (We will get to it several weeks from now, when we get to Allen on the British Industrial Revolution.)

What research questions does Hoffman's book raise? How could we go about answering--or making progress--on them?

Chapters:

Introduction

The Tournament in Early Modern Europe Made Conquest Possible

Why the Rest of Eurasia Fell Behind

Ultimate Causes

Gunpowder and Private Expeditions

Technology and Armed Peace in 19th Century Europe

Conclusion: The Price of Progress

Plus appendices: model of war and learning by doing; prices and military-sector productivity, political learning, data, model of armed peace and research

By the eighteenth century, Europeans dominated the military technology of gunpowder weapons, which had enormous advantages for fighting war at a distance and conquering other parts of the world. Their dominance, however, was surprising, because the technology had originated in China and been used with expertise in Asia and the Middle East. To account for their prowess with gunpowder weapons, historians have often invoked competition, but it cannot explain why they pushed this technology further than anyone else. The answer lies in the peculiar form that military competition took in western Europe: it was a winner take all tournament, and a simple model of the tournament shows why it led European rulers to spend heavily on the gunpowder technology, why the technology was advanced as a result, and why political incentives and military conditions made the rest of Eurasia fall behind.

Keynes's General Theory Contains Oddly Few Mentions of "Fiscal Policy"tag:typepad.com,2003:post-6a00e551f08003883401b8d2c79e6f970c2018-02-24T17:09:51-08:002018-02-24T17:12:44-08:00Something that has puzzled me for quite a while: Keynes's _General Theory_ contains remarkably few references to fiscal policy in any form: * "Government spending": no matches... * "Government purchases": no matches... * "Fiscal policy": 6 matches: * Four in one paragraph about how fiscal policy is the fifth in an enumerated list of factors affecting the marginal propensity to consume... * One about how an estate tax changes the marginal propensity to consume... * One about how fiscal policy in ordinary times is "not likely to be important"... * "Public works": 10 matches: * Three in a paragraph about how the multiplier amplifies the employment effect from public works... * Two in a paragraph warning that multiplier calculations are overoptimistic because of import, interest rate, and confidence crowding-out... * Four on how public works have a much bigger effect when unemployment is high and "public works even of doubtful utility may pay for themselves..." * One a criticism of Pigou's logic... And yet it also contains this one paragraph: >In some other respects the foregoing theory is moderately conservative in its implications. For whilst it indicates the vital importance of establishing certain central controls in matters which are now...J. Bradford DeLong

Something that has puzzled me for quite a while: Keynes's General Theory contains remarkably few references to fiscal policy in any form:

"Government spending": no matches...

"Government purchases": no matches...

"Fiscal policy": 6 matches:

Four in one paragraph about how fiscal policy is the fifth in an enumerated list of factors affecting the marginal propensity to consume...

One about how an estate tax changes the marginal propensity to consume...

One about how fiscal policy in ordinary times is "not likely to be important"...

"Public works": 10 matches:

Three in a paragraph about how the multiplier amplifies the employment effect from public works...

Two in a paragraph warning that multiplier calculations are overoptimistic because of import, interest rate, and confidence crowding-out...

Four on how public works have a much bigger effect when unemployment is high and "public works even of doubtful utility may pay for themselves..."

One a criticism of Pigou's logic...

And yet it also contains this one paragraph:

In some other respects the foregoing theory is moderately conservative in its implications. For whilst it indicates the vital importance of establishing certain central controls in matters which are now left in the main to individual initiative, there are wide fields of activity which are unaffected. The State will have to exercise a guiding influence on the propensity to consume partly through its scheme of taxation, partly by fixing the rate of interest, and partly, perhaps, in other ways. Furthermore, it seems unlikely that the influence of banking policy on the rate of interest will be sufficient by itself to determine an optimum rate of investment. I conceive, therefore, that a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment; though this need not exclude all manner of compromises and of devices by which public authority will co-operate with private initiative...

Chasing back this "banking policy" that is the alternative to the "somewhat comprehensive socialization of investment", there are three cites to "banking policy": this paragraph is one, and the others are:

"to every banking policy there corresponds a different long-period level of employment..."

and the "it is, I think, arguable that a more advantageous average state of expectation might result from a banking policy which always nipped in the bud an incipient boom by a rate of interest high enough to deter even the most misguided optimists. The disappointment of expectation, characteristic of the slump, may lead to so much loss and waste that the average level of useful investment might be higher if a deterrent is applied.... [But] the austere view, which would employ a high rate of interest to check at once any tendency in the level of employment to rise appreciably above the average of; say, the previous decade, is, however, more usually supported by arguments which have no foundation at all apart from confusion of mind..."

The question of why "it seems unlikely that the influence of banking policy on the rate of interest will be sufficient by itself... a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment..." is left hanging. And how "a somewhat comprehensive socialisation of investment" is to be implemented are left hanging as well.

So will somebody please explain to me why "fiscal policy" plays such a small part in the General Theory and yet such a large part in mindshare perceptions of "Keynesianism"?

(Early) Monday Smackdown/Hoisted from the Archives: Thinking Math Can Substitute for Economics Turns Economists Into Real Morons Departmenttag:typepad.com,2003:post-6a00e551f08003883401b7c952d8a8970b2018-02-24T10:58:48-08:002018-02-24T10:58:48-08:00The highly estimable Tim Taylor wrote: **Tim Taylor**: [Some Thoughts About Economic Exposition in Math and Words](http://conversableeconomist.blogspot.com/2018/02/some-thoughts-about-economic-exposition.html): "[Paul Romer's] notion that math is 'both more precise and more opaque' than words is an insight worth keeping..." And he recommends Alfred Marshall's workflow checklist: 1. Use mathematics as a shorthand language; rather than as an engine of inquiry. 2. Keep to them till you have done. 3. Translate into English. 4. Then illustrate by examples that are important in real life. 5. Burn the mathematics. 6. If you can't succeed in 4, burn 3. This is sage advice. And to underscore the importance of this advice, I think it is time to hoist the best example I have seen in a while of people with no knowledge of the economics and no control over their models using—simple—math to be idiots: Per Krusell and Tony Smith trying and failing to criticize Thomas Piketty: ---- (2015) [The Theory of Growth and Inequality: Piketty, Zucman, Krusell, Smith, and "Mathiness"](http://www.bradford-delong.com/2015/05/the-theory-of-growth-and-inequality-piketty-zucman-krusell-smith-and-mathiness.html): It is Krusell and Smith (2014) that suffers from "mathiness"--people not in control of their models deploying algebra untethered to the real world in a manner that approaches gibberish. I wrote about this last summer,...J. Bradford DeLong

Use mathematics as a shorthand language; rather than as an engine of inquiry.

Keep to them till you have done.

Translate into English.

Then illustrate by examples that are important in real life.

Burn the mathematics.

If you can't succeed in 4, burn 3.

This is sage advice.

And to underscore the importance of this advice, I think it is time to hoist the best example I have seen in a while of people with no knowledge of the economics and no control over their models using—simple—math to be idiots: Per Krusell and Tony Smith trying and failing to criticize Thomas Piketty:

Department of "Huh?!"--I Don't Understand More and More of Piketty's Critics: Per Krusell and Tony Smith

The Daily Piketty: Ryan Avent on Housing in the Twenty-First Century: Wednesday Focus for June 18, 2014

In Which I Continue to Fail to Understand Why Critics of Piketty Say What They Say: (Late) Friday Focus for June 6, 2014

Depreciation Rates on Wealth in Thomas Piketty's Database

This time, [it was a] reply... to Paul Romer... with a Tweetstorm. Here it is, collected, with paragraphs added and redundancy deleted:

My objection to Krusell and Smith (2014) was that it seemed to me to suffer much more from what you call "mathiness" than does Piketty or Piketty and Zucman. Recall that Krusell and Smith began by saying that they:

do not quite recognize... k/y=s/g...

But k/y=s/g is Harrod (1939) and Domar (1946). How can they fail to recognize it? And then their calibration--n+g=.02, δ=.10--not only fails to acknowledge Piketty's estimates of economy-wide depreciation rate as between .01 and .02, but leads to absolutely absurd results:

For a country with a K/Y=4, δ=.10 -> depreciation is 40% of gross output.

For a country like Belle Époque France with a K/Y=7, δ=.10 -> depreciation is 70% of gross output....

Krusell and Smith had no control whatsoever over the calibration of their model at all. Note that I am working from notes here, because http://aida.wss.yale.edu/smith/piketty1.pdf no longer points to Krusell and Smith (2014). It points, instead, to Krusell and Smith (2015), a revised version. In the revised version, the calibration differs. It differs in:

raising (n+g) from .02 to .03,

lowering δ from .10 or .05 (still more than twice Piketty's historical estimates), and

changing the claim that as n+g->0 K/Y increases "only very marginally" to the claim that it increases "only modestly". The right thing to do, of course, would be to take economy-wide δ=.02 and say that k/y increases "substantially".)

If Krusell and Smith (2015) offer any reference to Piketty's historical depreciation estimates, I missed it. If it offers any explanation of why they decided to raise their calibration of n+g when they lowered their δ, I missed that too.

Piketty has flaws, but it does not seem to me that working in a net rather than a gross production function framework is one of them.

And Krusell and Smith's continued attempts to demonstrate otherwise seem to me to suffer from "mathiness" to a high degree.

Here are the earlier pieces:

[DEPARTMENT OF "HUH?!"--I DON'T UNDERSTAND MORE AND MORE OF PIKETTY'S CRITICS: PER KRUSELL AND TONY SMITH](DEPARTMENT OF "HUH?!"--I DON'T UNDERSTAND MORE AND MORE OF PIKETTY'S CRITICS: PER KRUSELL AND TONY SMITH): As time passes, it seems to me that a larger and larger fraction of Piketty's critics are making arguments that really make no sense at all--that I really do not understand how people can believe them, or why anybody would think that anybody else would believe them. Today we have Per Krusell and Tony Smith assuming that the economy-wide capital depreciation rate δ is not 0.03 or 0.05 but 0.1--and it does make a huge difference...

Per Krusell and Tony Smith:Piketty’s ‘Second Law of Capitalism’ vs. standard macro theory: "Piketty’s forecast does not rest primarily on an extrapolation of recent trends...

...[which] is what one might have expected, given that so much of the book is devoted to digging up and displaying reliable time series.... Piketty’s forecast rests primarily on economic theory. We take issue.... Two ‘fundamental laws’, as Piketty dubs them... asserts that K/Y will, in the long run, equal s[net]/g.... Piketty... argues... s[net]/g... will rise rapidly in the future.... Neither the textbook Solow model nor a ‘microfounded’ model of growth predicts anything like the drama implied by Piketty’s theory.... Theory suggests that the wealth–income ratio would increase only modestly as growth falls...

And if we go looking for why they believe that "theory suggests that the wealth–income ratio would increase only modestly as growth falls", we find:

Per Krusell and Tony Smith: Is Piketty’s “Second Law of Capitalism” Fundamental? : "In the textbook model...

...the capital- to-income ratio is not s[net]/g but rather s[gross]/(g+δ), where δ is the rate at which capital depreciates. With the textbook formula, growth approaching zero would increase the capital-output ratio but only very marginally; when growth falls all the way to zero, the denominator would not go to zero but instead would go from, say 0.12--with g around 0.02 and δ=0.1 as reasonable estimates--to 0.1.

But with an economy-wide capital output ratio of 4-6 and a depreciation rate of 0.1, total depreciation--the gap between NDP and GDP--is not its actual 15% of GDP, but rather 40%-60% of GDP. If the actual depreciation rate were what Krussall and Smith say it is, fully half of our economy would be focused on replacing worn-out capital.

It isn't:

That makes no sense at all.

For the entire economy, one picks a depreciation rate of 0.02 or 0.03 or 0.05, rather than 0.10.

I cannot understand how anybody who has ever looked at the NIPA, or thought about what our capital stock is made of, would ever get the idea that the economy-wide depreciation rate δ=0.1.

And if you did think that for an instant, you would then recognize that you have just committed yourself to the belief that NDP is only half of GDP, and nobody thinks that--except Krusall and Smith. Why do they think that? Where did their δ=0.1 estimate come from? Why didn't they immediately recognize that that deprecation estimate was in error, and correct it?

Why would anyone imagine that any growth model should ever be calibrated to such an extraordinarily high depreciation rate?

And why, when Krusell and Smith snark:

we do not quite recognize [Piketty's] second law K/Y = s/g. Did we miss something quite fundamental[?]... The capital-income ratio is not s/g but rather s/(g+δ) no reference to Piketty's own explication of s/(n+δ), where δ is the rate at which capital depreciates...

do they imply that this is a point that Piketty has missed, rather than a point that Piketty explicitly discusses at Kindle location 10674?

?One can also write the law β=s/g with s standing for the total [gross] rather than the net rate of saving. In that case the law becomes β=s/(g+δ) (where δ now stands for the rate of depreciation of capital expressed as a percentage of the capital stock)...

I mean, when the thing you are snarking at Piketty for missing is in the book, shouldn't you tell your readers that it is explicitly in the book rather than allowing them to believe that it is not?

Today, Sunday, I cannot see a thing I want to change–save that I am, once again, disappointed by the quality of critics of Piketty: please step up your game, people!

In response to my Department of “Huh?!”–I Don’t Understand More and More of Piketty’s Critics: Per Krusell and Tony Smith, Per Krusell unfortunately writes:

Brad DeLong has written an aggressive answer to our short note…. Worry about increasing inequality… is no excuse for [Thomas Piketty’s] using inadequate methodology or misleading arguments…. We provided an example calculation where we assigned values to parameters—among them the rate of depreciation. DeLong’s main point is that the [10%] rate we are using is too high…. Our main quantitative points are robust to rates that are considerably lower…. DeLong’s main point is a detail in an example aimed mainly, it seems, at discrediting us by making us look like incompetent macroeconomists. He does not even comment on our main point; maybe he hopes that his point about the depreciation rate will draw attention away from the main point. Too bad if that happens, but what can we do…

Let me assure one and all that I focused–and focus–on the depreciation assumption because it is an important and central assumption. It plays a very large role in whether reductions in trend real GDP growth rates (and shifts in the incentive to save driven by shifts in tax regimes, revolutionary confiscation probabilities, and war) can plausibly drive large shifts in wealth-to-annual-income ratios. The intention is not to distract with inessentials. The attention is to focus attention on what is a key factor, as is well-understood by anyone who has control over their use of the Solow growth model.

Consider the Solow growth model Krusell and Smith deploy, calibrated to what Piketty thinks of as typical values for the 1914-80 Social Democratic Era: a population trend growth rate n=1%/yr, a labor-productivity trend growth rate g=2%/yr, W/Y=3.

Adding in the totally ludicrous Krusell-Smith depreciation assumption of 10%/yr means (always assuming I have not made any arithmetic errors) that a fall in n+g from 3%/yr to 1%/yr, holding the gross savings rate constant, generates a rise in the steady-state wealth-to-annual-net-income ratio from 3 to 3.75–not a very big jump for a very large shift in economic growth: the total rate of growth n+g has fallen by 2/3, but W/Y has only jumped by a quarter.

Adopting a less ludicrously-awry “Piketty” depreciation assumption of 3%/yr generates quantitatively (and qualitatively!) different results: a rise in the steady-state wealth-to-annual-net-income ratio from 3 to 4.708–the channel is more than twice has powerful.

We have a very large drop in Piketty’s calculations of northwest European economy-wide wealth-to-annual-net-income ratios from the Belle Époque Era that ended in 1914 to the Social Democratic Era of 1914-1980 to account for. How would we account for this other than by (a) reduced incentives for wealthholders to save and reinvest and (b) shifts in trend rates of population and labor-productivity growth? We are now in a new era, with rising wealth-to-annual-net-income ratios. We would like to be able to forecast how far W/Y will rise given the expected evolution of demography and technology and given expectations about incentives for wealthholders to save and reinvest.

We do provide long run series on capital depreciation in the "Capital Is Back" paper with Gabriel [Zucman] (see http://piketty.pse.ens.fr/capitalisback, appendix country tables US.8, JP.8, etc.). The series are imperfect and incomplete, but they show that in pretty much every country capital depreciation has risen from 5-8% of GDP in the 19th century and early 20th century to 10-13% of GDP in the late 20th and early 21st centuries, i.e. from about 1%[/year] of capital stock to about 2%[/year].

Of course there are huge variations across industries and across assets, and depreciation rates could be a lot higher in some sectors. Same thing for capital intensity.

The problem with taking away the housing sector (a particularly capital-intensive sector) from the aggregate capital stock is that once you start to do that it's not clear where to stop (e.g., energy is another capital intensive sector). So we prefer to start from an aggregate macro perspective (including housing). Here it is clear that 10% or 5% depreciation rates do not make sense.

No, James Hamilton, it is not the case that the fact that "rates of 10-20%[/year] are quite common for most forms of producers’ machinery and equipment" means that 10%/year is a reasonable depreciation rate for the economy as a whole--and especially not for Piketty's concept of wealth, which is much broader than simply produced means of production.

No, Pers Krusell and Anthony Smith, the fact that:

[you] conducted a quick survey among macroeconomists at the London School of Economics, where Tony and I happen to be right now, and the average answer was 7%[/year...

for "the" depreciation rate does not mean that you have any business using a 10%/year economy-wide depreciation rate in trying to assess how the net savings share would respond to increases in Piketty's wealth-to-annual-net-income ratio.

Who are these London School of Economics economists who think that 7%/year is a reasonable depreciation rate for a wealth concept that attains a pre-World War I level of 7 times a year's net national income? I cannot imagine any of the LSE economists signing on to the claim that back before WWI capital consumption in northwest European economies was equal to 50% of net income--that depreciation was a third of gross economic product.

One more remark: if more than half LSE macroeconomists really do believe that net domestic product is 28% lower than gross domestic product—for that is what a depreciation rate of 7% per year gets you with an aggregate capital-output ratio of 4—then more than half of LSE macroeconomists need to be in a different profession. I don't believe Krusell and Smith's survey. I don't believe their LSE colleagues told them what they claimed they had...

Paul Krugman Looks Back at the Last Twenty Years of the Macroeconomic Policy Debatetag:typepad.com,2003:post-6a00e551f08003883401bb09f5fd6f970d2018-02-23T14:47:47-08:002018-02-23T14:47:47-08:00Everybody interested in macroeconomics or macroeconomic policy should know this topic backwards and forwards by heart. My problem is that I do not see how I can add value to it. The only thing I can think of to do is to propose two rules: 1. Paul Krugman is right. 2. If you think Paul Krugman is wrong, refer to rule #1. I do wish that those who were not bad actors who made mistakes would 'fess up to them. Those who don't will get moved to the "bad actor" category: and, yes, I am looking at you, Marvin Goodfriend. The only remaining question, I think, is whether these should all be read in chronological or reverse chronological order. I find myself torn, with arguments on both sides having force: * **Paul Krugman** (2018): It’s Baaack, Twenty Years Later * **Olivier Blanchard and Daniel Leigh** (2013): Growth Forecast Errors and Fiscal Multipliers * **Paul Krugman** (2011): Ricardian Confusions() * **Paul Krugman** (2009b): One more time * **Paul Krugman** (2009a): A Dark Age of macroeconomics **Ben Bernanke** (1999): Japanese Monetary Policy: A Case of Self-Induced Paralysis? * **Paul Krugman** (1998): It's Baaack: Japan's Slump and the Return of the Liquidity TrapJ. Bradford DeLong

Everybody interested in macroeconomics or macroeconomic policy should know this topic backwards and forwards by heart. My problem is that I do not see how I can add value to it. The only thing I can think of to do is to propose two rules:

Paul Krugman is right.

If you think Paul Krugman is wrong, refer to rule #1.

I do wish that those who were not bad actors who made mistakes would 'fess up to them. Those who don't will get moved to the "bad actor" category: and, yes, I am looking at you, Marvin Goodfriend.

The only remaining question, I think, is whether these should all be read in chronological or reverse chronological order. I find myself torn, with arguments on both sides having force:

Economics as a Professional Vocation: Bulls--- Detection as a Student Learning Goaltag:typepad.com,2003:post-6a00e551f08003883401bb09f5a736970d2018-02-23T09:35:12-08:002018-02-23T10:02:52-08:00**Hoisted from the Archives**: [Economics as a Professional Vocation](http://www.bradford-delong.com/2017/11/economics-as-a-professional-vocation.html): The very sharp Binyamin Applebaum had an interesting rant.... >**Binyamin Applebaum**: @BCAPPELBAUM ON TWITTER: "I am not sure there is a defensible case for the discipline of macroeconomics if they can’t at least agree on the ground rules for evaluating tax policy. What does it mean to produce the signatures of 100 economists in favor of a given proposition when another 100 will sign their names to the opposite statement? How does Harvard, for example, justify granting tenure to people who purport to work in the same discipline and publicly condemn each other as charlatans? How are ordinary people, let alone members of Congress, supposed to figure out which tenured professors are the serious economists?... I would say, first, that journalists (and others) are supposed to use their eyes and their brains. They can take a look at the Nine Unprofessional Republican Economists who placed their letter in the Wall Street Journal... [on a] Saturday containing: >A conventional approach to economic modeling suggests that such an increase in the capital stock would raise the level of GDP in the long run by just over 4%. If achieved over a decade, the...J. Bradford DeLong

Binyamin Applebaum: @BCAPPELBAUM ON TWITTER: "I am not sure there is a defensible case for the discipline of macroeconomics if they can’t at least agree on the ground rules for evaluating tax policy. What does it mean to produce the signatures of 100 economists in favor of a given proposition when another 100 will sign their names to the opposite statement? How does Harvard, for example, justify granting tenure to people who purport to work in the same discipline and publicly condemn each other as charlatans? How are ordinary people, let alone members of Congress, supposed to figure out which tenured professors are the serious economists?...

I would say, first, that journalists (and others) are supposed to use their eyes and their brains. They can take a look at the Nine Unprofessional Republican Economists who placed their letter in the Wall Street Journal... [on a] Saturday containing:

A conventional approach to economic modeling suggests that such an increase in the capital stock would raise the level of GDP in the long run by just over 4%. If achieved over a decade, the associated increase in the annual rate of GDP growth would be about 0.4% per year...

And note that by [the next] Wednesday they were saying:

Our letter addresses the impact of corporate tax reform on GDP; we did not offer claims about the speed of adjustment to a long-run result...

That degree of—four days later—"who are you going to believe: us or your lying eyes?" is a definite tell. Similarly, they can take a look at the Hundred Unprofessional Republican Economists who placed their letter in Business Insider...

One thing Binyamin could do is to not play "he said/she said" a la: "What does it mean to produce the signatures of 100 economists in favor of a given proposition when another 100 will sign their names to the opposite statement?" when he could be doing some of the heavy lifting of intellectual garbage collection and bulls--- detection.

One thing we in the academy can do is to explicitly make bulls--- deduction an explicit student learning goal. For example:

We ask students to do practice problems using the Solow growth model on paper, and then to reproduce the analysis and draw the graphs on the exam. But the problem is that after the final exam students are very unlikely to ever be asked to do anything similar again. If Intermediate Macroeconomics is to be useful—if its learning goals are to be worth anything—it is because it will put in the back of your brain stuff so that when they in the future read things like:

[Such a tax cut would be likely to] increase... the capital stock... raise the level of GDP in the long run by just over 4%. If achieved over a decade, the associated increase in the annual rate of GDP growth would be about 0.4% per year.... [In] the House and Senate bills... the increase in capital accumulation would be less, and the gain in the long-run level of GDP would be just over 3%, or 0.3% per year for a decade...

Wait a minute! They say this policy change enriches America by increasing investment and making the economy more capital intensive. But policies that work by raising the capital-output ratio do not have anything like their full effect in a decade! Let me dig out my notes... halving the gap to the BGP K/Y ratio takes 0.72/[(1-α)(n+g+δ)] years—call it 20 years. So the first ten years are not the whole effect but rather a bit more than a quarter of it...

And the hard question—the one that I have no belief I have solved—is: what kind of exam will induce what kind of learning that will make Intermediate Macroeconomics a useful part of students' intellectual panoplies in the future? Suggestions and advice more than welcome...

Box 4.4.7: Speed of Convergence and Estimating the Effects of Policy Changes: An Alternative: It is worth noting an alternative calculation of the likely effects of the Trump administration's economic policies, carried out by four Stanford economists and five others.

Even more alarming than the reversal-of-sign of the effect, is the estimate of the growth rate: a jump of + 0.3 percentage points per year. It comes from the nine economists' observation that:

increase... [would] raise the level of GDP in the long run by just over 4%. If achieved over a decade, the associated increase in the annual rate of GDP growth would be about 0.4% per year.... [In] the House and Senate bills... the increase in capital accumulation would be less, and the gain in the long-run level of GDP would be just over 3%, or 0.3% per year for a decade...

But the nine economists know just as well as you do that only 28 percent of the total gain accrues in the first decades, not all of it.

Since you are explicitly talking about 10-year growth rates in your letter, would it not be better to... show that the effect in the 10th year is less than one-third of the long-run effect, translating into an annual growth rate of less than 0.1 percentage point?...

The nine economists denied that they had made claims about the speed of adjustment to the post policy change balanced growth path and so offered a prediction that real GDP growth would be boosted by not 0.1% (or -0.1%) but rather 0.3% points per year over the next decade https://www.washingtonpost.com/news/wonk/wp/2017/11/29/economists-respond-to-summers-furman-over-mnuchin-letter/?utm_term=.8d4d8991717a:

First point you raised: Our letter addresses the impact of corporate tax reform on GDP; we did not offer claims about the speed of adjustment to a long-run result...

We believe that Stanford (and Harvard, and Columbia, and Princeton, and the American Action Forum, and the Lindsey Group) have a serious problem here...

Trumpfrastructure: No Longer So Live at Project Syndicatetag:typepad.com,2003:post-6a00e551f08003883401b8d2d5a5d6970c2018-02-23T09:34:02-08:002018-02-23T09:34:05-08:00[Donald Trump Is Playing to Lose](https://www.project-syndicate.org/commentary/unpopular-trump-infrastructure-plan-by-j--bradford-delong-2018-02): Donald Trump is certainly a very different kind of president from what we have been used to—not just in temperament; in (lack of) knowledge about America, its government, and the world; and in public presentation-of-self. He is very different from what we have been used to in his orientation toward policy as well. After "New Democrat" Bill Clinton won his plurality victory in 1992, he promptly began "triangulating": He talked left with an (unsuccessful) fiscal stimulus bill. He tacked center with a pro-growth deficit-reduction bill He tacked right with the North American Free Trade Agreement. He tacked center-right with a crime bill: "tough on crime, and tough on the causes of crime". He tacked center-right with the reappointment of conservative stalwart Alan Greenspan to run the Federal Reserve. He tacked left with an (unsuccessful) regulatory-heavy health-care reform. The idea was that he needed to: (a) enact policies that would be successful in their aims, and so make America greater; (b) enact policies that would give many who had not voted for him reason to approve of his performance as president, and so become not a plurality but a majority president; and (c) enact enough...J. Bradford DeLong

Donald Trump Is Playing to Lose: Donald Trump is certainly a very different kind of president from what we have been used to—not just in temperament; in (lack of) knowledge about America, its government, and the world; and in public presentation-of-self. He is very different from what we have been used to in his orientation toward policy as well.

After "New Democrat" Bill Clinton won his plurality victory in 1992, he promptly began "triangulating": He talked left with an (unsuccessful) fiscal stimulus bill. He tacked center with a pro-growth deficit-reduction bill He tacked right with the North American Free Trade Agreement. He tacked center-right with a crime bill: "tough on crime, and tough on the causes of crime". He tacked center-right with the reappointment of conservative stalwart Alan Greenspan to run the Federal Reserve. He tacked left with an (unsuccessful) regulatory-heavy health-care reform.

The idea was that he needed to: (a) enact policies that would be successful in their aims, and so make America greater; (b) enact policies that would give many who had not voted for him reason to approve of his performance as president, and so become not a plurality but a majority president; and (c) enact enough of his base's priorities to make them, if not enthusiastic, at least understand that no-compromise leads to only evanescent terms in office and to no durable substantive policy accomplishments at all.

After Barack Obama won his majority victory in 2008, he promptly began moderating: He tacked center with a technocrat-approved financial rescue and fiscal stimulus plan. He tacked center with a market-oriented health-care reform—Republican then front-runner Mitt Romney's, in fact. He tacked center-right with an (unsuccessful) attempt to strike a grand deficit-reducing tax-raising and Social Security and Medicare-cutting "bargain". He tacked center with an (unsuccessful) market-oriented global-warming cap-and-trade plan—former Republican candidate John McCain's, in fact. He tacked center-right with the reappointment of somewhat cautious Ben Bernanke to run the Federal Reserve.

The idea was that he wanted most of all, above everything else, desperately, to be president not of a Red America or a Blue America but of a Purple America. He thus pursued cautious and technocratically-approved policies wherever he could, hoping that their goodness for America would attract Republican support. He would then tell his base that attaining national unity and healing partisan divisions—making a truly Purple America—was more important for the long term arc of the moral universe than was advancing Democratic core goals.

After Donald Trump won his minority victory in 2016, he promptly began... something: He tacked white nativist right with his Muslim ban. He tacked destructive right with his attempt to repeal—without replacing—ObamaCare, thus threatening health-finance chaos without advancing any conservative technocratic ideas about good directions for health-care reform. He tacked white nativist right again in opposing opposition to police brutality. He tacked plutocratic right with a tax cut for the rich that somehow left on the table all of the pieces that might have won at least some approval from any technocrats as likely to spur productive investment and economic growth.

This is not normal politics. This does not seek to unify the country. This does not seek to enact policies that will actually work and achive their purported aims, and so make America greater. This does not provide anybody in the majority who did not vote for him with any reason to approve of his performance as president. This does not try to teach his base the proper road to durable rather than evanescent legislative victories, or even continuance in office.

Again: This is not normal. Here in California last year we were treated to a remarkable spectacle. The California-elected members of the Republican caucus in the House of Representatives did not argue for a version of the tax cut bill that would have been good for their constituents. It was as if they had already given up fighting to retain their seats: they were looking forward to future jobs outside of California in Washington for lobbyists whose water they would therefore carry.

And now we are told that the next legislative priority for the Trump administration, a far as policy is concerned, is infrastructure. But is this an opportunity for the administration to tack left, and enact an infrastructure bill that will have an egalitarian rather than a plutocratic distributional orientation, and so make America greater? Unlikely. Is this an opportunity to tack technocratic, and enact a bill that that technocrats believe will provide a boost to economic growth, and so make America greater? Unlikely.

What will the bill do? First, we do not know, because there has been no policy-design process: no set of hearings and white papers and discussions and arguments and back-and-forth during which the policy and legislative communities reach not a rough consensus but a sense of what the options and their benefits and drawbacks are. The public-sphere process of deliberation has—as wtih the Muslim ban, as with the attempted not repeal-and-repace but the repeal of ObamaCare, as with the collected Twitter musings of Donald Trump, as with tax cut—simply been absent.

What about the shape of the policy we can glean so far is worse than not encouraging. Back in 1776 Adam Smith set out three proper tasks for the government in a libertarian society–one devoted to installing and maintaining the “system of natural liberty“. Those three were: defense, police—protection of life, limb, and property and enforcement of contracts—and, third, infrastructure. According to Adam Smith, the government has the duty of:

erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expence to any individual or small number of individuals, though it may frequently do much more than repay it to a great society...

And we, who know the economics of public goods somewhat better than Adam Smith did, would add that even when you can make it privately profitable to provide such public works and public institutions—by granting monopolies—it is destructive of societal well-being to do so.

Yet Trump's staff have not gotten Adam Smith’s memo about good government. Or, rather, perhaps, to them Adam Smith’s memo and whether the policy actually makes America greater are irrelevant. Trump's infrastructure program seems highly likely to be much the opposite. It looks to be a policy of providing public subsidies to private investors so they can construct those components of infrastructure for which they can successfully profit by charging monopoly prices.

Thus it looks to be not so much a pivot toward national unity and broad presidential popularity as another plutocratic–or, rather, kleptocratic – play. It does not look as though intended to attempt to accomplish any of the end Clinton and Obama sought when they tried to become president of most, if not all, of the people.

Now it may be politically efficacious. America's public sphere is broken. We can all already see now, in our minds' eyes, pundits and reporters at organizations from Fox News to the New York Times, pundits and reporters who have not gotten or pretend they did not get Adam Smith's memo, stroking their chins and lamenting why the Democrats are rejecting Donald Trump's pivot and open hand for infrastructure.

-—

8 long paragraphs

Estimating the Long Run Growth Effects of Tax Cuts: An Exampletag:typepad.com,2003:post-6a00e551f08003883401bb09f509e3970d2018-02-20T12:54:50-08:002018-02-22T08:39:50-08:00Does this belong in the next edition of Martha Olney's and my _Macroeconomics_ textbook? **Box 4.4.6: Estimating the Effects of Policy Changes: An Example** In late 2017 and early 2018 the Trump administration and the Republican congressional caucuses pushed through a combined tax cut and a relaxation of spending caps to the tune of increasing the federal government budget deficit by about 1.4% of GDP. These policy changes were intended to be permanent. Not the consensus but the center-of-gravity analysis by informed opinion in the economics profession of the effects on long-run growth of such a _permanent_ change in fiscal policy would have made the following points: 1. The U.S. economy at the start of 2018 was roughly at full employment, or at least the Federal Reserve believed that it was at full employment and was taking active steps to keep spending from rising faster than their estimate of the trend growth of the economy, so a long-run Solow growth model analysis would be appropriate. 2. The economy's savings-investment effort rate, s, has two parts: private and government saving: $ s = s_p + s_g $. 3. The private savings rate $ s_p $ is very hard to move by...J. Bradford DeLong
<div xmlns="http://www.w3.org/1999/xhtml"><p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b7c951a59e970b-pi" alt="2018 02 06 DeLong and Olney Macro 3rd Ch 4 4 Using the Solow Growth Model" title="2018-02-06_DeLong_and_Olney_Macro_3rd_Ch_4_4_Using_the_Solow_Growth_Model.png" border="0" width="750" /></p>
<p>Does this belong in the next edition of Martha Olney's and my <em>Macroeconomics</em> textbook?</p>
<p><strong>Box 4.4.6: Estimating the Effects of Policy Changes: An Example</strong></p>
<p>In late 2017 and early 2018 the Trump administration and the Republican congressional caucuses pushed through a combined tax cut and a relaxation of spending caps to the tune of increasing the federal government budget deficit by about 1.4% of GDP. These policy changes were intended to be permanent.</p>
<p>Not the consensus but the center-of-gravity analysis by informed opinion in the economics profession of the effects on long-run growth of such a <em>permanent</em> change in fiscal policy would have made the following points:</p>
<ol>
<li><p>The U.S. economy at the start of 2018 was roughly at full employment, or at least the Federal Reserve believed that it was at full employment and was taking active steps to keep spending from rising faster than their estimate of the trend growth of the economy, so a long-run Solow growth model analysis would be appropriate. </p></li>
<li><p>The economy's savings-investment effort rate, s, has two parts: private and government saving: $ s = s_p + s_g $.</p></li>
<li><p>The private savings rate $ s_p $ is very hard to move by changes in economic policy. Policy changes that raise rates of return on capital—interest and profit rates—both make it more profitable to save and invest more but also make us richer in the future, and so diminish the need to save and invest more. These two roughly offset.</p></li>
<li><p>Therefore, when the economy is at full employment, changes in overall savings are driven by changes in the government contribution: $ {\Delta}s = {\Delta}s_g $.</p></li>
<li><p>And an increase in the deficit is a reduction in the government savings rate.</p></li>
</ol>
<p>The standard center-of-gravity analysis would thus start by assuming that the economy was on its balanced growth path, and investigate the consequences of a reduction in s by 1.4% points in order to get an estimate of the effect of this policy shift if it were to be a permanent change.</p>
<p>Set up the Solow growth model, with the Labor force growth rate n = 1.0% per year, the labor efficiency growth rate g = 1.5% per year, the depreciation rate $ \delta $ = 3% per year, the production function diminishing returns to investment parameter $ \alpha $ = 1/3, and the initial efficiency of labor $ E_0 $ = 65000. That produces an initial state of the economy's balanced growth path of:</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
$ \left(\frac{K}{Y}\right)^*_{ini} = 4 $</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
$ {\left(\frac{Y}{L}\right)^<em>_{ini} =
{\left(\frac{K}{Y}\right)^</em><em>{ini}}
^{\left(\frac{\alpha}{1-\alpha}\right)}
E</em>0 =
4^{(1/2)}(65000) = 130000} $</p>
<p>Along the alternative balanced growth path, the same variables are:</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
$ \left(\frac{K}{Y}\right)^*_{alt} =
\left(\frac{0.22-0.014}{0.01 + 0.015 + 0.03}\right)^{\left(\frac{1/3}{1-1/3}\right)} =
3.745 $</p>
<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
$ \left(\frac{Y}{L}\right)^<em>_{alt} = $
${\left(\frac{K}{Y}\right)^</em><em>{alt}} $
$^{\left(\frac{\alpha}{1-\alpha}\right)} $
$E</em>0 = $
$\left(\frac{0.22-0.014}{0.01 + 0.015 + 0.03}\right)^{\left(\frac{1/3}{1-1/3}\right)}(65000) = $
$3.745^{(1/2)}(65000) = 130000 $</p>
<p>That is, the alternative balanced growth path has an output per worker level 3.3 percent below the initial path The policy is expensive for the economy in the long run.</p>
<p>How fast does this growth retardation make itself felt? We know that the velocity of convergence $ v_c $ in the Solow growth model is:</p>
<p>$ v_c = -(1-\alpha)(n+g+\delta) $</p>
<p>In this case:</p>
<p>$ v_c = -(1-\alpha)(n+g+\delta) =
-(1-1/3)(0.01+0.015+0.035) = -0.0329 $</p>
<p>The economy closes about 1/30 of the gap between its initial and its alternative balanced growth path every year. The first-year effect is thus about (-0.033)(0.33) = -0.001: a drop in the growth rate of 0.1% point, and a drop in the level of 0.1% point after one year. After 10 years, the economy will have closed about 28 percent of the 3.3 percentage point gap—a total effect on the level of real GDP ten years out of 0.9%: nine-tenths of a percentage point. </p>
<hr />
<pre><code># CODE
#
# a "what if"—if the tax "reform" and the spending increase were
# to become permanent changes in policy, and were to reduce the
# savings rate by 1.4% points...
# ----
alpha = 1/3
n = 0.01
g = 0.015
delta = 0.03
s = 0.22
Delta_s = -0.014
E0 = 65000
KoYstar_ini = s/(n + g + delta)
YoLstar_ini = (KoYstar_ini)**(alpha/(1-alpha))*E0
KoYstar_alt = (s + Delta_s)/(n + g + delta)
YoLstar_alt = (KoYstar_alt)**(alpha/(1-alpha))*E0
conv_speed = (1-alpha)*(n+g+delta)
print(KoYstar_ini, "= Initial BGP Capital-Output Ratio")
print(YoLstar_ini, "= Initial BGP Output per Worker")
print(KoYstar_alt, "= Alternative BGP Capital-Output Ratio")
print(YoLstar_alt, "= Alternative BGP Output per Worker")
print(conv_speed, "= speed of convergence")
print(np.log(YoLstar_alt/YoLstar_ini), "= long-run growth effect in percentage points")
</code></pre>
<p>4.0 = Initial BGP Capital-Output Ratio <br />
129999.99999999999 = Initial BGP Output per Worker <br />
3.745454545454545 = Alternative BGP Capital-Output Ratio <br />
125795.64958513252 = Alternative BGP Output per Worker <br />
0.036666666666666674 = speed of convergence <br />
-0.0328756887814 = long-run growth effect in percentage points</p>
<hr />
<p><strong>Box 4.4.7: Speed of Convergence and Estimating the Effects of Policy Changes: An Alternative</strong></p>
<p>It is worth noting an alternative calculation of the likely effects of the Trump administration's economic policies, carried out by four Stanford economists and five others. The most important thing to know to understand and evaluate this calculation is that all nine of these economists are strong Republicans. They wrote <a href="http://delong.typepad.com/2017-11-26-nine-unprofessional-republican-economists.pdf">http://delong.typepad.com/2017-11-26-nine-unprofessional-republican-economists.pdf</a>, in a piece that was notionally a letter to U.S. Treasury Secretary Steven Mnuchin but that was in actuality primarily intended to be published in the <em>Wall Street Journal</em> to influence the debate, that Trump administration fiscal policy—the tax cut—would:</p>
<blockquote>
<p>increase... the capital stock... raise the level of GDP in the long run by just over 4%. If achieved over a decade, the associated increase in the annual rate of GDP growth would be about 0.4% per year.... [In] the House and Senate bills... the increase in capital accumulation would be less, and the gain in the long-run level of GDP would be just over 3%, or 0.3% per year for a decade...</p>
</blockquote>
<p>The four Stanford University economists are:</p>
<ul>
<li><p><strong>Michael J. Boskin</strong>, Tully M. Friedman Professor of Economics, Stanford
University; Chairman of the Council of Economic Advisers under President
George H.W. Bush</p></li>
<li><p><strong>John Cogan</strong>, Leonard and Shirley Ely Senior Fellow, Hoover Institution,
Stanford University; Deputy Director of the Office of Management and
Budget under President Ronald Reagan</p></li>
<li><p><strong>George P. Shultz</strong>, Thomas W. and Susan B. Ford Distinguished Fellow,
Hoover Institution, Stanford University; Secretary of State under President
Ronald Reagan; Secretary of the Treasury under President Richard Nixon</p></li>
<li><p><strong>John. B. Taylor</strong>, Mary and Robert Raymond Professor of Economics,
Stanford University; Undersecretary of the Treasury for International
Affairs under President George W. Bush</p></li>
</ul>
<p>The five others are:</p>
<ul>
<li><p><strong>Robert J. Barro</strong>, Paul M. Warburg Professor of Economics, Harvard
University</p></li>
<li><p><strong>Douglas Holtz-Eakin</strong>, President, American Action Forum, former director of
the Congressional Budget Office</p></li>
<li><p><strong>Glenn Hubbard</strong>, Dean and Russell L. Carson Professor of Finance and
Economics (Graduate School of Business) and Professor of Economics (Arts
and Sciences), Columbia University; Chairman of the Council of Economic
Advisers under President George W. Bush</p></li>
<li><p><strong>Lawrence B. Lindsey</strong>, President and Chief Executive Officer, The Lindsey
Group; Director of the National Economic Council under President George
W. Bush</p></li>
<li><p><strong>Harvey S. Rosen</strong>, John L. Weinberg Professor of Economics and Business
Policy, Princeton University; Chairman of the Council of Economic Advisers
under President George W. Bush</p></li>
</ul>
<p>Their conclusions—"the gain in the long-run level of GDP would be just over 3%, or 0.3% per year for a decade..."—look in their effects on levels of output per worker like the calculation in box 4.4.6, with one crucial difference: the sign is reversed. In 4.4.6, the first order effect of the policy changes was to reduce national savings and investment and thus make America a less capital intensive and poorer economy. And this calculation, the first order effect is to raise national savings and investment and us make America a more capital intensive and richer economy. Moreover, the effect on the growth rate is not only of the wrong sign, but three times the magnitude: instead of a slowdown in annual growth of 0.1% point, there is a speedup of</p>
<p>Why the difference?</p>
<p>Why does not the increased government deficit and thus government anti-saving reduce the national savings investment rate s? The authors do not say.</p>
<p>Where is the analysis stating that increased after tax rates of return on savings and investment have offsetting substitution and income effects, with the substitution effect raising saving and the income effect lowering it? That analysis, also, is absent.</p>
<p>What, then, is present? This:</p>
<blockquote>
<p>Fundamental tax reform... [is] a set of tax changes that reduces tax distortions on productive activities (for example, business investment and work) and broadens the tax base to reduce tax differences among similarly situated businesses and individuals. Fundamental tax reform should also advance the objectives of fairness and simplification.... The proposals emerging from the House, Senate, and President Trump’s administration, fall squarely within this tradition.... There is some uncertainty about just how much additional investment is induced by reductions in the cost of capital, but... many economists believe that a 10% reduction in the cost of capital would lead to a 10% increase in the amount of investment. Simultaneously reducing the corporate tax rate to 20% and moving to immediate expensing of equipment and intangible investment would reduce the user cost by an average of 15%, which would increase the demand for capital by 15%.... Such an increase in the capital stock would raise the level of GDP... just over 3%, or 0.3% per year for a decade...</p>
</blockquote>
<p>That's all she writes. And note: "many" economists—not "most economists", not "nearly all economists", not "the center of gravity of informed economic opinion".</p>
<p>And the claims about "the proposals emerging from the House, Senate, and President Trump’s administration" being "within this tradition" of "broaden[ing] the tax base to reduce tax differences among similarly situated businesses and individuals... advanc[ing] the objectives of fairness and simplification..." are simply false.</p>
<p>Even more alarming than the reversal-of-sign of the effect, is the estimate of the growth rate: a jump of + 0.3 percentage points per year. It comes from the nine economists' observation that:</p>
<blockquote>
<p>increase... [would] raise the level of GDP in the long run by just over 4%. If achieved over a decade, the associated increase in the annual rate of GDP growth would be about 0.4% per year.... [In] the House and Senate bills... the increase in capital accumulation would be less, and the gain in the long-run level of GDP would be just over 3%, or 0.3% per year for a decade...</p>
</blockquote>
<p>But the nine economists know just as well as you do that only 28 percent of the total gain accrues in the first decades, not all of it.</p>
<p>When challenged by former U.S. Treasury Secretary Lawrence Summers and former Council of Economic Advisers Chair Jason Furman <a href="https://www.washingtonpost.com/news/wonk/wp/2017/11/28/lawrence-summers-dear-colleagues-please-explain-your-letter-to-steven-mnuchin/?utm_term=.9d690352f4b3">https://www.washingtonpost.com/news/wonk/wp/2017/11/28/lawrence-summers-dear-colleagues-please-explain-your-letter-to-steven-mnuchin/?utm_term=.9d690352f4b3</a>:</p>
<blockquote>
<p>Since you are explicitly talking about 10-year growth rates in your letter, would it not be better to... show that the effect in the 10th year is less than one-third of the long-run effect, translating into an annual growth rate of less than 0.1 percentage point?...</p>
</blockquote>
<p>The nine economists denied that they had made claims about the speed of adjustment to the post policy change blaanced growth path and so offered a prediction that real GDP growth would be boosted by not 0.1% (or -0.1%) but rather 0.3% points per year over the next decade
<a href="https://www.washingtonpost.com/news/wonk/wp/2017/11/29/economists-respond-to-summers-furman-over-mnuchin-letter/?utm_term=.8d4d8991717a">https://www.washingtonpost.com/news/wonk/wp/2017/11/29/economists-respond-to-summers-furman-over-mnuchin-letter/?utm_term=.8d4d8991717a</a>:</p>
<blockquote>
<p><strong>First point you raised</strong>: Our letter addresses the impact of corporate tax reform on GDP; we did not offer claims about the speed of adjustment to a long-run result...</p>
</blockquote>
<p>We believe that Stanford (and Harvard, and Columbia, and Princeton, and the American Action Forum, and the Lindsey Group) have a serious problem here: As Berkeley medieval history professor Ernst Kantorowicz wrote <a href="http://www.lib.berkeley.edu/uchistory/archives_exhibits/loyaltyoath/symposium/kantorowicz.html">http://www.lib.berkeley.edu/uchistory/archives_exhibits/loyaltyoath/symposium/kantorowicz.html</a> back in the 1940s, shortly before being fired for refusing to take a loyalty oath demanded by the Regents of the University of California, academic freedom is a grave and serious thing:</p>
<blockquote>
<p>Professions... entitled to wear a gown: the judge, the priest, the scholar. This garment stands for its bearer's maturity of mind, his independence of judgment, and his direct responsibility to his conscience and to his God.... They should be the very last to allow themselves to act under duress and yield to pressure. It is... shameful and undignified... an affront and a violation of both human sovereignty and professional dignity... to bully... under... economic coercion... compell[ing] either giv[ing] up... tenure or... his freedom of judgment, his human dignity and his responsible sovereignty as a scholar...</p>
</blockquote>
<p>Those possessing academic freedom are given great latitude so that they can speak what they, after great and considered research and reflection, believe sincerely to be the truth. But this freedom to be responsible solely to one's conscience and God requires that one be responsible to one's conscience and God. But what if bearers of academic freedom fear not God nor their own consciences? What then?</p>
<p>One possibility is to inquire and point out that something has gone wrong, as Summers and Furman did, politely, with:</p>
<blockquote>
<p>Since you are explicitly talking about 10-year growth rates in your letter, would it not be better to... show that the effect in the 10th year is less than one-third of the long-run effect, translating into an annual growth rate of less than 0.1 percentage point?...</p>
</blockquote>
<p>inviting the response: "yes, it would have been better; we have made an error; we will correct it".</p>
<p>But that is not the reply Summers and Furman got.</p>
<p>A second possibility is to teach young people the basics of macroeconomics. I hope everybody who read the nine economists letter who had ever taken a macroeconomics course read that "the gain in the long-run level of GDP would be just over 3%, or 0.3% per year for a decade..." and immediately thought: "that is not how the effects of an increase in the economy's capital intensity from a higher savings-investement effort work—these authors, prestigious as their academic appointments may be, are not doing economic analysis but rather playing political Three-Card Monte". I hope everybody who reads this textbook remembers enough of it that they are able to do the work of reading with a jaundiced eye that is clearly needed here.</p>
<p>There was, I should say, a further oblique reply by one of the four Stanford economists, Michael Boskin <a href="https://www.project-syndicate.org/commentary/republican-tax-plan-growth-effects-by-michael-boskin-2017-12">https://www.project-syndicate.org/commentary/republican-tax-plan-growth-effects-by-michael-boskin-2017-12</a>. In it he made points:</p>
<ol>
<li><p>"Robert Barro..." published a deeper elaboration of the tax plan’s growth effects..." (which saiclaimedd that the long-run balanced growth path boost to the level of output per worker would be not 3 percent but 7 percent).</p></li>
<li><p>"The current tax bill could... have been better.... But such a bill would not pass Congress."</p></li>
<li><p>"The question is whether a viable final bill will be better than the status quo."</p></li>
<li><p>"Barro and I have clearly come to a different conclusion.... While I certainly respect Summers and Furman’s right to their views, I am not about to cede my professional judgment to others, in or out of government."</p></li>
<li><p>"There are legitimate differences of opinion on how much and how quickly the tax plan will affect investment decisions."</p></li>
<li><p>"Summers... and DeLong... have made the strongest case I know that equipment investment can have a large impact... much larger than in the conventional models."</p></li>
<li><p>"I believe that the current reform may well have deviated further from the ideal had we not offered our analysis and advice.... Many factors other than economists’ textbook policy proposals affect the final product."</p></li>
<li><p>"The actual tax provisions people and businesses will be required to use have yet to be written, and will be determined partly by technical interpretations and regulations in the coming months."</p></li>
</ol>
<p>Point (6) seems to me to be a red herring, at least as far as the policy change's effects on the growth rate are concerned. We—DeLong and Summers—believe that $ \alpha $ is higher than the 1/3 assumed in the center-of-gravity of informed economic opinion analyses. A higher value of $ \alpha $ both stretches out the time it takes for the economy to converge and magnifies the ultimate differential, and these effects roughly cancel out, leaving the near term growth rate effect unchanged. And a higher $ \alpha $ magnifies both the boost from higher savings and the drag from those savings being diverted to finance larger government deficits. </p>
<p>The overwhelming impression I get from Boskin's piece is one of extraordinary cognitive dissonance. If I sincerely believed that a policy change was likely to boost America's productivity and wealth by 7 percent, I would not be apologizing for it. I would be crowing from the rooftops. I would not be agreeing that "the current tax bill could... have been better". I would not be saying that the bar is the very low "better than the status quo". I would not be defending my participation in the process on the grounds that the bill would have been worse if I had washed my hands of it. I would not be saying that we need to work hard now to improve it because "the actual tax provisions people and businesses will be required to use have yet to be written". I would not be saying that there are legitimate differences of opinion and that I respect the judgemtns of those who think differently.</p>
<p>I thus read Boskin's piece as, in large part, and perhaps not completely of his intention, a <em>sotto voce</em> argument that:</p>
<ol>
<li><p>We nine economists said in public what we needed to say so that we could get into the room where the decisions were really being made.</p></li>
<li><p>We nine economists made the bill better than it would have been otherwise.</p></li>
<li><p>We nine economists will continue to make the implementation of the bill better.</p></li>
</ol>
</div>
Noise Trading, Bubbles, and Excess Stock Market Volatility: Hoisted from the Archives from 2013tag:typepad.com,2003:post-6a00e551f08003883401b8d2da0776970c2018-02-13T14:34:48-08:002018-02-13T14:34:48-08:00**[Noise Trading, Bubbles, and Excess Stock Market Volatility](http://www.bradford-delong.com/2013/12/noise-trading-bubbles-and-excess-volatility-in-the-aggregate-stock-market-noah-smith-and-robert-shiller-and-andrei-shleifer-a.html ): Hoisted from the Archives from 2013**: Noah Smith has a very nice post this morning: Noah Smith: Risk premia or behavioral craziness?: >John Cochrane is quite critical of Robert Shiller.... He... thinks that Shiller is trying to make finance less quantitative and more literary (I somehow doubt this, given that Shiller is first and foremost an econometrician, and not that literary of a guy). >But the most interesting criticism is about Shiller's interpretation of his own work. Shiller showed... stock prices mean-revert. He interprets this as meaning that the market is inefficient and irrational... "behavioral craziness". But others--such as Gene Fama--interpret long-run predictability as being due to predictable, slow swings in risk premia. >Who is right? As Cochrane astutely notes, we can't tell who is right just by looking at the markets themselves. We have to have some other kind of corroborating evidence. If it's behavioral craziness, then we should be able to observe evidence of the craziness elsewhere in the world. If it's predictably varying risk premia, then we should be able to measure risk premia using some independent data source... Let's back up to do some explaining... When economists...J. Bradford DeLong
<div xmlns="http://www.w3.org/1999/xhtml"><p><strong><a href="http://www.bradford-delong.com/2013/12/noise-trading-bubbles-and-excess-volatility-in-the-aggregate-stock-market-noah-smith-and-robert-shiller-and-andrei-shleifer-a.html">Noise Trading, Bubbles, and Excess Stock Market Volatility</a>: Hoisted from the Archives from 2013</strong>: Noah Smith has a very nice post this morning:</p> <strong>Noah Smith:</strong> <a href="http://noahpinionblog.blogspot.com/2013/12/risk-premia-or-behavioral-craziness.html">Risk premia or behavioral craziness?</a>:</p>
<blockquote>
<p>John Cochrane is quite critical of Robert Shiller.... He... thinks that Shiller is trying to make finance less quantitative and more literary (I somehow doubt this, given that Shiller is first and foremost an econometrician, and not that literary of a guy).</p>
</blockquote>
<blockquote>
<p>But the most interesting criticism is about Shiller's interpretation of his own work. Shiller showed... stock prices mean-revert. He interprets this as meaning that the market is inefficient and irrational... "behavioral craziness". But others--such as Gene Fama--interpret long-run predictability as being due to predictable, slow swings in risk premia.</p>
<p>Who is right? As Cochrane astutely notes, we can't tell who is right just by looking at the markets themselves. We have to have some other kind of corroborating evidence. If it's behavioral craziness, then we should be able to observe evidence of the craziness elsewhere in the world. If it's predictably varying risk premia, then we should be able to measure risk premia using some independent data source...</p>
</blockquote>
<hr class="at-page-break" />
<p>Let's back up to do some explaining...</p>
<p>When economists think about the prices rational people are willing to pay for financial security, they assume that people ask themselves six questions:</p>
<ol>
<li><p>What is the <em>expected future value</em> of the security--what would be the case if I were neither lucky nor unlucky in this investment?</p></li>
<li><p>By how much should I discount that future value because I expect to be richer in the future than I am now, and so value extra purchasing power now more than extra purchasing power in the future?</p></li>
<li><p>Suppose I were lucky in this investment: how much more would I make than if things were neutral?</p></li>
<li>Suppose I were unlucky in this investment: how much would I lose relative to if things were neutral?</li>
<li>If I were lucky I would be richer, and so the things I buy with my money won't be as urgent: how much would I value the extra money if I am lucky taking account of the fact that I would be richer, and so how much should I elevate my willingness to pay above what I calculated in (2)?</li>
<li>If I were unlucky I would be poorer, and so the things I would have bought with the money I won't have would be more urgent: how much would I miss the money I lose if I am unlucky, taking account of the fact that I would be poorer, and so how much should I depress my willingness to pay below what I calculated in (5)?</li>
</ol>
<p>Now look at the stock market since 1880:</p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f080038834019b0348c2c3970d-pi" alt="Screenshot 12 19 13 6 26 AM" title="Screenshot_12_19_13__6_26_AM.png" border="0" width="500" height="349" /></p>
<p>The blue line is the inflation-adjusted value of a representative basket of stocks--or equity claims to the assets and future profits of America's companies.</p>
<p>The red line is what you would be willing to pay for a basket of stocks if your answers to (2) through (6) made you willing to pay 20 times the fundamental earning power of the companies whose stocks you are buying, and if you calculated that fundamental earning power by simply taking a ten-year lagged moving average of the earnings that the companies report. It is thus a crude and simple-minded measure of "fundamentals"--ignoring variations in the amount of upside (3) and downside risks (4), ignoring variations in willingness to pay (5) for a given amount of upside and desire to insure (6) against a given amount of downside risk, and ignoring variations in the slope of the intertemporal price system (2).</p>
<p>The variations of the price at which the stock market sells around this crude and simple-minded measure of fundamentals are enormous:</p>
<p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401a3fabce5ac970b-pi" alt="Screenshot 12 19 13 7 10 AM" title="Screenshot_12_19_13__7_10_AM.png" border="0" width="500" height="334" /></p>
<p>Sometimes (i.e., 1900) the stock market as a whole can be selling for 15% above its Shiller fundamental and then four years later be selling for 30% below. Sometimes (i.e., 1920) the market can be selling for 70% below its Shiller fundamental and then nine years later be selling for 50% above. Sometimes (i.e., 1996) the market can be selling at its Shiller fundamental and then four years later be selling for 100% above and three years after that be back at the fundamental again.</p>
<p>(A) Do these big swings relative to the crude Shiller fundamental primarily occur because the crude Shiller fundamental is a lousy proxy--because the market knows more and better about the profitability of American companies then simply taking a ten-year trailing average of earnings, rebasing it to the present, and capitalizing it at 5%?</p>
<p>No.</p>
<p>I am not aware of any serious economist today who thinks it more likely than not--or even possible--that the big swings of the market around the crude Shiller fundamental occur because the market knows more about the <em>current</em> earnings power of operating companies.</p>
<p>(B) Do these big swings relative to the crude Shiller fundamental primarily occur because technological progress speeds up and slows down, hence we alternately expect to be richer and poorer in the future, and thus the discount factor (2) we apply varies? Or, conversely, because as technological progress speeds up and slows down we mark our expectations of future values in (1) up and down?</p>
<p>No.</p>
<p>For one thing, these two effects nearly offset each other in general equilibrium: situations in which we mark up expected future values are situations in which we expect to be rich and so mark down the marginal value of wealth in the future. For another, news about the importance of technological revolutions arrives slowly and continuously over decades--it doesn't look at all like the changes in the market relative to the crude Shiller fundamental.</p>
<p>I am not aware of any serious economist today who thinks it more likely than not--or even possible--that the big swings of the market around the crude Shiller fundamental occur because the market is changing its assessment of future earnings growth or of the slope of the intertemporal price system.</p>
<p>(C) Do these big swings relative to the crude Shiller fundamental primarily occur because the market gets it wrong? The market is a voting mechanism that aggregates and averages the wealth-weighted views of the current crop of active traders. As the lucky double-down and the unlucky vanish and as the herd of investors are buffeted by fads and fashions, they buy and sell and push prices up and down, and the little bit of sober long-horizon smart money in the market is unable to do much to damp the irrational bull-market bubble of the late 1920s and the late 1990s or the bear bubble of the 1970s.</p>
<p>This is Bob Shiller's view. This is my view. This is Andrei and Jeremy's view. This is, I think, Noah's view--but as an untenured junior faculty member who will someday need a broad spectrum of supporting outside letters, he is... diplomatic. Note the role of "astutely" in the paragraph I quoted from Noah above...</p>
<p>(D) Do these big swings relative to the crude Shiller fundamental primarily occur because of changes in upside and downside risk (3) and (4)? This is the fearfully intelligent <a href="http://papers.nber.org/papers/w11310.pdf">Robert Barro's and T.A. Reitz's view.</a> I, at least, think his model is simply wrong: <a href="http://delong.typepad.com/delong_economics_only/2007/02/preliminary_mar.html">model</a> <a href="http://delong.typepad.com/sdj/2005/09/comment_on_barr.html">doesn't</a> <a href="http://delong.typepad.com/print/20070213_note_barro_rietz.pdf">fit</a> <a href="http://delong.typepad.com/sdj/2012/06/rare-events-and-asset-prices-1.html">the</a> data very well, and it <em>requires</em> that there be no safe assets in the economy to drive the conclusion that the average price of safe bonds relative to risky equities. But the discussion is ongoing, and it is definitely a possibility: some at least of the 1933, 1975, and 2008-9 troughs in the market were due to a sudden increase in the perceived risk that things would go to hell in a hand basket.</p>
<p>(E) Do these big swings relative to the crude Shiller fundamental primarily occur because of shifts in (5) and (6), because of "time varying risk premia"--that sometimes the marginal utility of wealth of everyone's utility is constant and so people are indifferent between a lifetime income of $2,000,000 with certainty and a 1/3 chance of getting a lifetime income of $4,000,000 accompanied by a 2/3 chance of getting only $1,000,000; and sometimes the marginal utility of wealth is steeply curved so that people really, strongly prefer the first; and preferences are so unstable that society's preferences as a whole rapidly shift from one state to another in a matter of little more than months.</p>
<p>Now when Gene Fama and John Cochrane and company back in the 1980s raised this as their interpretation of Bob Shiller, I at first thought really did think it was a joke--my genuine reaction was <a href="http://www.youtube.com/watch?v=2p5AG0Tqh3A">"you're putting me on"</a>.</p>
<p>The curvature of any individual's utility function--how close any individual is to material satiation given current technological possibilities--is a deep psychological parameter that would require a radical rewiring of the brain to accomplish. Yet Fama, Cochrane, and company propose that such rewirings took place between 1996 and 2000, and that the rewirings were then unrewired between 2000 and 2002? Even if some individual has a Damascus moment and decides that while they value all of their current wealth greatly they would value extra wealth not at all--the kind of thing you need to have happen in order to account for the 2000-2002 movements in the stock market--that is just one individual. Fama, Cochrane, and company require that these complete neural rewirings happen to nearly everybody in the entire economy, because in a rational financial market risk is carried by those who are the least risk-averse--who are least subject to sudden satiation--and if one person's brain becomes rewired somebody else who was almost as far from satiation will take up the slack.</p>
<p>Let's go back to Noah:</p>
<blockquote>
<p>Personally I suspect that it's behavioral spazzing....</p>
</blockquote>
<p>Experimental asset markets exhibit highly predictable and significant spazzing&nbsp;that looks suspiciously like real-world "bubble" episodes....</p>
<blockquote>
<p><a href="http://www.nber.org/papers/w18686">Robin Greenwood and Andrei Shleifer</a>... collate six different data sets that ask investors about their expectations of stock returns. The six series are highly correlated, meaning that they are really capturing some general phenomenon in the market. The stated expectations all seem to be "extrapolative", meaning that when returns have been good recently, people think they will continue to be good. But the stated expectations are usually wrong; when people think returns will be high, returns tend to fall soon after. What's more, that fall could be predicted by a simple asset pricing model. In other words, these stated expectations are not rational expectations. So if these stated expectations really do represent investors' beliefs, then we have direct evidence of behavioral spazzing...</p>
</blockquote>
<p>Here I become very uneasy with the state of dialogue. Noah writes "So <em>if</em> these stated expectations really do represent investors' beliefs..." How could they not? Is Noah saying that people are misleading Andrei and Jeremy? No. He is saying that perhaps people do not actually believe what they think they believe--or, rather, that when economists talk about how somebody has a "belief" they are not referring to what people actually believe but to something else that is not a belief but that economists find convenient to say is a belief or to call a belief. This way, it seems to me, lies madness.</p>
<p>Noah explicates:</p>
<blockquote>
<p>Cochrane has suggested that people responding to these surveys are not reporting their true beliefs, but rather their "risk-neutral probabilities".... If that's true, then these surveys wouldn't be good evidence of behavioral spazzing. So the issue has not been decided yet...</p>
</blockquote>
<p>Now when I taught and when I discuss finance with the graduate students both in the Econ Department and at the Haas Business School, I find as a rule that only one in five or so is actually able to understand and use risk-neutral probability measures to analyze a situation. (This may be because "risk-neutral probabilities" may be the worst-named concept in economics: they are not probabilities, and they are definitely not risk-neutral.) To claim that we should model investors' thought processes and claim that they are rational utility-maximizers using concepts that most people with graduate training in finance do not understand seems... silly.</p>
<p>Noah continues:</p>
<blockquote>
<p>But progress has been made. In my opinion, the available evidence is suggestive of the "behavioral spazzing" explanation, but not conclusive. The important thing is that this is not one of those "this will never be resolved" sorts of debates. This is a debate that can and will be resolved, as better and better data becomes available. Science progresses.</p>
</blockquote>
<p>But let me be skeptical. Let's replay the debate:</p>
<ol>
<li><p>Shiller shows up with evidence showing extraordinary excess volatility in the stock market relative to fundamentals. Fama and company claim that he has committed gross econometric errors and that his work is useless.</p></li>
<li><p>Shiller and others bound the biases and find that, yes, there is still extraordinary excess volatility in the aggregate market. Poterba and Summers and Fama and French and others confirm Shiller's statistics. Fama and company, however, say that it is not evidence of bubbles or noise-trading or irrational herding, but, rather, of "time-varying risk premia".</p></li>
<li><p>Fama and company present no evidence of the kinds of rapid neural rewiring of the entire population to shift the shape of declining marginal utility of wealth that would be needed to drive such time-varying risk premia, but rather seize the high ground of the null hypothesis for themselves.</p></li>
<li><p>Micro studies show that small toy financial markets where students can trivially and easily solve for fundamental values nevertheless exhibit lots of noise trading of various forms. Fama and company ignore it.</p></li>
<li><p>Shiller, Greenwood and Shleifer, Case and Quigley, many others show up with an increasing body of evidence that, yes, it is people's beliefs about future market prices that are irrational, extrapolative, and drivers of excess volatility. Fama and Cochrane and company say now that people's "beliefs" do not bear any relationship to what people say they believe and actually do believe.</p></li>
<li><p>More important: the excess volatility/return predictability we see in episodes like 1996-2000, 2000-2002, 2007-2009, 2009-2013, 1920-1929, 1900-1904, and so forth has a half-life of ten years. That means that in Fama and Campbell's schema that in 2000--when the market price was twice its 5% Shiller fundamental--the expected one-year real return on the market was the 5% fundamental return minus a 10% "mean reversion of risk premia back to their norm" term. I don't care how far from satiation your marginal utility of wealth is: nobody rational should have been holding their pro-rata share of equities in 2000, and to claim that the people doing so had simply decided that they were less risk-averse than normal is... something that leads words to fail me...</p></li>
</ol>
<p>So I look at the situation, and I have to judge that those who explain aggregate stock market deviations from the crude Shiller fundamental as driven by rational agents' revising their views of the curvature of their utility functions are people--some of them very smart indeed, some of them not smart at all--who are themselves in an irrational intellectual bubble. They really do appear to me to be people who ought to have been persuaded by Shiller a generation ago. They were not. And so now they are are turning their smarts to constructing reasons to justify their not having been persuaded.</p>
<p>And, in so doing, I think that they are not acting very intelligently.</p>
<p>Thus I am less optimistic than Noah about how, or whether, this thing will be settled in my lifetime. We have already progressed to the stage of "people's beliefs are not what they believe". Where will we go next? I do not know. But I do not expect to see intellectual convergence to what I think is the justified true belief: that Bob Shiller is right.</p>
</div>
Reading: Robert Allen (2009): The British Industrial Revolution in Global Perspectivetag:typepad.com,2003:post-6a00e551f08003883401bb09f2b816970d2018-02-12T19:22:23-08:002018-02-12T19:48:48-08:00Robert Allen (2009): The British Industrial Revolution in Global Perspective | <> Start with the mysterious **"Pseudoerasmus"**: _[Random thoughts on critiques of Allen’s theory of the Industrial Revolution][]_: >I love the work of Robert Allen... steel... the Soviet Union... English agriculture. And his little book on global economic history—is there a greater marvel of illuminating concision than that?... His point of departure is always the very concrete reasons that a firm or an industry or a country is more productive than another. I’m not rubbishing institutions or culture as explanations—I’m just saying, Allen’s virtue is to start with problems of production first. Yet I always find myself in the peculiar position of loving his work like a fan-girl and disagreeing with so much of it. In particular, I’m sceptical of his theory of the Industrial Revolution. [Random thoughts on critiques of Allen’s theory of the Industrial Revolution]: https://pseudoerasmus.com/2016/12/01/allen/ >Allen has been advocating for at least 20 years now that... England’s high wages relative to its cheap energy and low capital costs biased technical innovation in favour of labour-saving equipment, and that is why it was cost-effective to industrialise in England first, before the rest of Europe (let alone Asia).... Allen’s...J. Bradford DeLong

I love the work of Robert Allen... steel... the Soviet Union... English agriculture. And his little book on global economic history—is there a greater marvel of illuminating concision than that?... His point of departure is always the very concrete reasons that a firm or an industry or a country is more productive than another. I’m not rubbishing institutions or culture as explanations—I’m just saying, Allen’s virtue is to start with problems of production first. Yet I always find myself in the peculiar position of loving his work like a fan-girl and disagreeing with so much of it. In particular, I’m sceptical of his theory of the Industrial Revolution.

Allen has been advocating for at least 20 years now that... England’s high wages relative to its cheap energy and low capital costs biased technical innovation in favour of labour-saving equipment, and that is why it was cost-effective to industrialise in England first, before the rest of Europe (let alone Asia).... Allen’s is not a monocausal theory... but his distinctive contribution is the high-wage economy.... The theory is appealing, in part, because the technological innovations of the early Industrial Revolution were not exactly rocket science (a phrase used by Allen himself), so one wonders why they weren’t invented earlier and elsewhere. (Mokyr paraphrasing Cardwell said something like nothing invented in the early IR period would have puzzled Archimedes.) But... as Mokyr has tirelessly argued, inventions were too widespread across British society to be a matter of just the right incentives and expanding markets—and this is a point now being massively amplified by Anton Howes....

Kelly, Mokyr, & Ó Gráda (2014)... pointed out... [that] Allen must assume that unit labour costs (wage divided by labour productivity) were... higher. But if the Anglo-French wage gap were matched by a commensurate labour productivity gap, then the labour cost to the employer would have been the same in the two countries.... Besides, you already had capital-intensive production techniques in several sectors well before the classic industrial revolution period—especially in silk and calico-printing. Silk-throwing (analogous to spinning in cotton) was mechanised in Italy before 1700. The idea was pirated by Lombe who set up a water-powered silk-throwing factory circa 1719, and he was imitated by many others by the 1730s. Then you had heavily machine-dependent printing works for textiles (especially calicoes) in many European cities before the canonical industrial revolution period. None of these seemed to require Allen’s “high wage economy”. (Not to mention, Allen’s model has implications for the diffusion of the Industrial Revolution, and Scottish industrialisation was almost simultaneous with the English one, despite wage differences.)

Nonetheless, I had mentally reconciled Allen and Mokyr in the manner of Crafts by considering Mokyr = supply of inventions, Allen = demand. But there has been a spate of critiques.... Humphries & Schneider... show that the estimated 1 million women and children who spun yarn with wool, linen, and cotton in their rural homes were paid much lower wages than Allen’s narrative has relied on: ~4 d [pence] per day, rather than the >8d/day assumed in Allen. And one of the showcases of his theory is the series of inventions mechanising yarn spinning!... persuasive, but it’s also theoretically compelling. Men, especially in big cities, may have been paid higher wages, but women and children in the countryside were not. This makes early modern England much more like a “surplus labour economy” with an “unlimited supply of labour” à la Arthur Lewis.... Labour market monopsonists also loom large in modern development microeconomics!...

Outline:

The Industrial Revolution and the pre-industrial economy

The Commercial Revolution generated a unique structure of wages and prices in eighteenth-century Britain

The Industrial Revolution simply would not have been profitable in other times and places

The slow adoption of British technology was because the first generation technologies were not profitable to adopt outside Britain

But the third generation technologies were

The high-wage economy of pre-industrial Britain

The agricultural revolution

The cheap energy economy

Why England succeeded

Why was the Industrial Revolution British

The steam engine

Cotton

Coke smelting

Inventors, Enlightenment, and human capital

From Industrial Revolution to modern economic growth

Eight Orienting Questions:

Pseudoerasmus says: Mokyr = supply; Allen = demand; both were essential. No Enlightenment, no Industrial Revolution. Is he (probably) right?

How do we assess how much encouragement was provided to inventors and innovators by Britain's uniquely high labor/energy price ratio?

What are the other places that Allen has in mind (since Hiero of Alexandria's aeropile in which building a first generation "steam engine" would have been possible as a marvel?

Say that there are three breakpoints in which the rate of growth of the global average efficiency of labor E jumps--the Commercial Revolution, which sees the growth rate of E jump from 0.1%/year to 0.3%/year; the Industrial Revolution, with sees the growth rate of E jump from 0.3%/year to 1.4%/year; and then the coming of Modern Economic Growth around 1870 which sees the growth rate of E jump from 1.4%/year to 5.2%/year. What would the world be like if that third jump had not occurred? What if that second jump had not occurred?

Had French Marshal Tallard won at Blenheim and French Marshal Villeroy won at Ramillies, France would have had the resources to build a fleet to win control over Atlantic trade. What form would a French-led European economy have taken in the eighteenth and early nineteenth centuries? Why is Allen so certain that it would not have created a profession of engineering?

Weren't there other roads to industrialization that involved technological change that economized on something other than labor--on energy, on capital, on other scarce inputs of one sort or another?

So you economize on labor by inventing the spinning machine and the steam engine. Why does it go further? What are the forward inventive linkages here?

If there were no oats--which British workers refused to eat in bulk--Allen would characterize Britain not as a high-wage but as an overvalued exchange rate economy. But such economies typically export not manufactures but financial and other services. How is it that Britain exports manufactures?

Allen's conclusion:

I have argued that the famous inventions of the British Industrial Revolution were responses to Britain's unique economic environment and would not have been developed anywhere else.... Buy why did those inventions matter?.... Weren't there alternative paths to the twentieth century? These questions are closely related to another... asked by Mokyr: why didn't the Industrial Revolution peter out after 1815?... [O]ne-shot rise[s] in productivity [before] did not translate into sustained economic growth. The nineteenth century was different--the First Industrial Revolution turned into Modern Economic Growth. Why? Mokyr's answer... that scientific knowledge increased enough to allow continuous invention [is incomplete]....

Britain's pre-1815 inventions were particularly transformative.... Cotton was the wonder industry.... [T]he great achievement of the British Industrial Revolution was... the creation of the first large engineering industry that could mass-produce productivity-raising machinery. Machinery production was the basis of three developments that were the immeiate explanations of the continuation of economic growth until the First World War... (1) the general mechanization of industry; (2) the railroad; and (3) steam-powered iron ships. The first raised productivity... the second and third created the global economy and the international division of labor... (O'Rourke and Williamson, 1999). Steam... accounted for close to half of the growth in labor productivity in Britain in the second half of the nineteenth century (Crafts 2004). The nineteenth-century engineering industry was a spin-off from the coal industry. All three of the developments... depended on two things: the steam engine and cheap iron....

Cotton played a supporting role in the growth of the engineering industry.... The first is that it grew to immense size.... Mechanization in other activities did not have the same potential... global industry with.. price-responsive demand... cotton... sustained the engineering industry by providing it with a large and growing market for equipment....

There was a great paradox... the macro-inventions of the eighteenth century... increased the demand for capital and energy relative to labour. Since capital and energy were relatively cheap in Britain, it was worth developing the macro-inventions there and worth using them in their early, primitave forms. These forms were not cost-effective elsewhere.... However, British engineers improved this technology.... This local learning often saved the input that was used excessively in the early years of the invention's life and which restricted its use to Britain. As the coal consumption of rotary steam power declined from 35 pounds per horsepower-hour to 5 pounds, it paid to apply steam power to more and more uses.... Old fashioned, thermally inefficient steam engines were not "appropriate" technology for countries where coal was expensive. These countries did not have to invent an "appropriate" technology for their conditions, however. The irony is that the British did it for them....

The British inventions of the eighteenth century--cheap iron and the steam engine, in particular--were so transformative.... The technologies invented in France--in paper production, glass, and knitting--were not, The French innovations did not lead to general mechanization or globalization.... The British were not more rational or prescient than the French... simply luckier in their geology. the knock-on effect was large, however: there is no reason to believe that French technology would have led to the engineering industry, the general mechanization of industrial processes, the railway, the steamship, or the global economy.... [T]here was only one route to the twentieth century--and it traversed northern Britain.

The Industrial Revolution is one of the most celebrated watersheds in human history. It is no longer regarded as the abrupt discontinuity that its name suggests, for it was the result of an economic expansion that started in the sixteenth century. Nevertheless, the eighteenth century does represent a decisive break in the history of technology and the economy. The famous inventions–the spinning jenny, the steam engine, coke smelting, and so forth–deserve their renown1, for they mark the start of a process that has carried the West, at least, to the mass prosperity of the twenty-first century. The purpose of this essay is to explain why they occurred in the eighteenth century, in Britain, and how the process of their invention has transformed the world... […]

The industrial revolution was fundamentally a technological revolution, and progress in understanding it can be made by focussing on the sources of invention.... [T]he reason the industrial revolution happened in Britain, in the eighteenth and nineteenth centuries, was not because of luck (Crafts 1977) or British genius or culture or the rise of science. Rather it was Britain’s success in the international economy that set in train economic developments that presented Britain’s inventors with unique and highly remunerative possibilities. The industrial revolution was a response to the opportunity… […]

What commercial success did for Britain was to create a structure of wages and prices that differentiated Britain from the continent and, indeed, Asia: In Britain, wages were remarkably high and energy cheap. This wage and price history was a fundamental reason for the technological breakthroughs of the eighteenth century whose object was to substitute capital and energy for labour. Scientific discoveries and scientific culture do not explain why Britain differed from the rest of Europe. They may have been necessary conditions for the industrial revolution, but they were not sufficient: Without Britain’s distinctive wage and price environment, Newton would have produced as little economic progress in England as Galileo produced in Italy... [...]

The working assumption of this paper is that technology was invented by people in order to make money.... [L]abour was particularly expensive and energy particularly cheap in Britain, so inventors in Britain were led to invent machines that substituted energy and capital for labour.... The scale of the mining industry in eighteenth century Britain was much greater than anywhere else, so the return to inventing improved drainage machinery (a.k.a. the steam engine) was greater in Britain than in France or China. Third, patents that allow the inventor to capture all of the gains created by his invention raise the rate of return and encourage invention... [...]

Britain was a high wage economy in four senses:1. At the exchange rate, British wages were higher than those of its competitors. 2. High silver wages translated into higher living standards than elsewhere. 3. British wages were high relative to capital prices. 4. Wages in northern and western Britain were exceptionally high relative to energy prices...

The different trajectories of the wage-rental ratio created different incentives to mechanize production in the two parts of Europe. In England, the continuous rise in the cost of labour relative to capital led to an increasingly greater incentive to invent ways of substituting capital for labour in production. On the continent, the reverse was true…. It was not Newtonian science that inclined British inventors and entrepreneurs to seek machines that raised labour productivity but the rising cost of labour... [...]

Britain’s unusual wages and prices were due to two factors. The first was Britain’s success in the global economy, which was in part the result of state policy. The second was geographical–Britain had vast and readily worked coal deposits…. The superior real wage performance of northwestern Europe was due to a boom in international trade…. In a mercantilist age, imperialism was necessary to expand trade, and greater trade led to urbanization.... Coal deposits were a second factor contributing to England’s unusual wage and price structure…. First, inexpensive coal raised the ratio of the price of labour to the price of energy (Figure 4), and, thereby, contributed to the demand for energy-using technology. In addition, energy was an important input in the production of metals and bricks, which dominated the index of the price of capital services.... [C]oal is a ‘natural’ resource, but the coal industry was not a natural phenomenon.... It was the growth of London in the late sixteenth century, however, that caused the coal industry to take off. The Dutch cities provide a contrast that reinforces the point (Pounds and Parker 1957, de Vries and van der Woude 1997, Unger 1984). The coal deposits that stretched from northeastern France across Belgium and into Germany were as useful and accessible as Britain’s.... The pivotal question is why city growth in the Netherlands did not precipitate the exploitation of Ruhr coal in a process parallel to the exploitation of Northern English coal. Urbanization in the Low Countries also led to a rise in the demand for fuel. In the first instance, however, it was met by exploiting Dutch peat. This checked the rise in fuel prices, so that there was no economic return to improving transport on the Ruhr or resolving the political-taxation issues related to shipping coal down the Rhine. Once the Newcastle industry was established, coal could be delivered as cheaply to the Low Countries as it could be to London, and that trade put a ceiling on the price of energy in the Dutch Republic that forestalled the development of German coal. This was portentous: Had German coal been developed in the sixteenth century rather than the nineteenth, the industrial revolution might have been a Dutch-German breakthrough rather than a British achievement... [...]

The following generalizations apply to many inventions including the most famous: 1. The British inventions were biased. They were labour saving and energy and capital using.... 2. As a result of 1, cost reductions were greatest at British factor prices, so the new technologies were adopted in Britain and not on the continent.... [C]oke smelting was not profitable in France or Germany before the mid-nineteenth century (Fremdling 2000). Continuing with charcoal was rational behaviour in view of continental factor prices. This result looks general; in which case, adoption lags mean that British technology was not cost-effective at continental input prices. 3. The famous inventions of the industrial revolution were made in Britain rather than elsewhere in the world because the necessary R&D was profitable in Britain (under British conditions) but unprofitable elsewhere.... 4. Once British technology was put into use, engineers continued to improved it, often by economizing on the inputs that were cheap in Britain. This made British technology cost-effective in more places and led to its spread across the continent later in the nineteenth century.... The theory advanced here explains the technological breakthroughs of the industrial revolution in terms of the economic base of society–natural resources, international trade, profit opportunities. Through their impact on wages and prices, these prime movers affected both the demand for technology and its supply... [...]

Why did the French ignore the new spinning machines? Cost calculations for France are not robust, but the available figures indicate that jennies achieved consistent savings only at high count work, which was not the typical application (Ballot 1923, pp. 48-9). In France, a 60 spindle jenny cost 280 livre tournois in 1790 (Chassagne 1991, p. 191), while a labourer in the provinces earned about three quarters of a livre tournois per day, so the jenny cost 373 days labour. In England, a jenny cost 140 shillings and a labourer earned about one shilling per day, so the jenny was worth 140 days labour (Chapman and Butt 1988, p. 107). In France, the value of the labour saved with the jenny was not worth the extra capital cost, while in England it was. French cost comparisons show that Arkwright’s water frame, a much more capital intensive technique, was no more economical than the jenny. The reverse was true in England where water frames were rapidly overtaking jennies. The French lag in mechanization was the result of the low French wage… […]

Why did the industrial revolution lead to modern economic growth? I have argued that the famous inventions of the British industrial revolution were responses to Britain’s unique economic environment and would not have been developed anywhere else. This is one reason that the Industrial Revolution was British. But why did those inventions matter? The French were certainly active inventors, and the scientific revolution was a pan-European phenomenon. Wouldn’t the French, or the Germans, or the Italians, have produced an industrial revolution by another route? Weren’t there alternative paths to the twentieth century? These questions are closely related to another important question asked by Mokyr: Why didn’t the industrial revolution peter out after 1815? He is right that there were previous occasions when important inventions were made. The result, however, was a one-shot rise in productivity that did not translate into sustained economic growth. The nineteenth century was different–the First Industrial Revolution turned into Modern Economic Growth. Why? Mokyr’s answer is that scientific knowledge increased enough to allow continuous invention. Technological improvement was certainly at the heart of the matter, but it was not due to discoveries in science–at least not before 1900. The reason that incomes continued to grow in the hundred years after Waterloo was because Britain’s pre-1815 inventions were particularly transformative, much more so than continental inventions. That is a second reason that the Industrial Revolution was British and also the reason that growth continued throughout the nineteenth century.... The nineteenth century engineering industry was a spin-off of the coal industry. All three of the developments that raised productivity in the nineteenth century depended on two things–the steam engine and cheap iron. Both of these, as we have seen, were closely related to coal. The steam engine was invented to drain coal mines, and it burnt coal. Cheap iron required the substitution of coke for charcoal and was prompted by cheap coal. (A further tie- in with coal was geological–Britain’s iron deposits were often found in proximity to coal deposits.) There were more connections: The railroad, in particular, was a spin-off of the coal industry. Railways were invented in the seventeenth century to haul coal in mines and from mines to canals or rivers. Once established, railways invited continuous experimentation to improve road beds and rails. Iron rails were developed in the eighteenth century as a result, and alternative dimensions and profiles were explored. Furthermore, the need for traction provided the first market for locomotives. There was no market for steam-powered land vehicles because roads were unpaved and too uneven to support a steam vehicle (as Cugnot and Trevithick discovered). Railways, however, provided a controlled surface on which steam vehicles could function, and colliery railways were the first purchasers of steam locomotives. When George Stephenson developed the Rocket for the Rainhill trials, he tested his design ideas by incorporating them in locomotives he was building for coal railways. In this way, the commercial operation of primitive versions of technology promoted further development as R&D expenses were absorbed as normal business costs.... The reason that the British inventions of the eighteenth century–cheap iron and the steam engine, in particular–were so transformative was because of the possibilities they created for the further development of technology. Technologies invented in France–in paper production, glass, knitting–did not lead to general mechanization or globalization. One of the social benefits of an invention is the door it opens to further improvements. British technology in the eighteenth century had much greater possibilities in this regard than French inventions. The British were not more rational or prescient than the French in developing coal-based technologies: The British were simply luckier in their geology. The knock-on effect was large, however: There is no reason to believe that French technology would have led to the engineering industry, the general mechanization of industrial processes, the railway, the steam ship, or the global economy. In other words, there was only one route to the twentieth century–and it went through northern Britain...

Why Low Inflation in the Global North Should Be No Surprisetag:typepad.com,2003:post-6a00e551f08003883401b7c93fed41970b2018-02-11T09:28:00-08:002018-02-11T09:30:13-08:00**[No Longer Fresh Over at Project Syndicate](https://www.project-syndicate.org/)**: [Why Low Inflation in the Global North Should Be No Surprise](https://www.project-syndicate.org/commentary/low-inflation-no-surprise-by-j--bradford-delong-2018-01): Late last summer the thoughtful and very sharp Nouriel Roubini used his space here at [Project Syndicate](http://project-syndicate.org) to attribute the stubborn and, by many, unexpected persistence of low inflation in the Global North to "positive" (so-called, even though a number of them are on balance unwelcome) shocks to aggregate supply: **Nouriel Roubini**: [The Mystery of the Missing Inflation](https://www.project-syndicate.org/commentary/monetary-policy-missing-inflation-by-nouriel-roubini-2017-09): >The recent growth acceleration in the advanced economies would be expected to bring with it a pickup in inflation.... Yet core inflation has fallen.... Developed economies have been experiencing positive supply shocks.... The Fed has justified its decision to start normalizing rates... by arguing that the inflation-weakening supply-side shocks are temporary.... Central banks aren’t willing to give up on their formal 2% inflation target, [but] they are willing to prolong the timeline for achieving it... This is, I believe, significantly more likely than not to be a faulty diagnosis. It is, I think, based on a fundamental misreading of the historical evidence from the 1970s through the 1990s about what has, historically since World War II, driven inflation in the countries of the Global...J. Bradford DeLong

The recent growth acceleration in the advanced economies would be expected to bring with it a pickup in inflation.... Yet core inflation has fallen.... Developed economies have been experiencing positive supply shocks.... The Fed has justified its decision to start normalizing rates... by arguing that the inflation-weakening supply-side shocks are temporary.... Central banks aren’t willing to give up on their formal 2% inflation target, [but] they are willing to prolong the timeline for achieving it...

This is, I believe, significantly more likely than not to be a faulty diagnosis. It is, I think, based on a fundamental misreading of the historical evidence from the 1970s through the 1990s about what has, historically since World War II, driven inflation in the countries of the Global North. The near-consensus belief since the 1970s has been and remains that the Phillips Curve has a substantial slope—a strong reaction of prices to demand pressure or slack—so that relatively small excursions of aggregate demand above levels consistent with full employment would have substantial impact on inflation, and that expectations of inflation are rapidly adaptive: easy de-anchored via a process in which accelerations of inflation in the recent past get rapidly and substantially incorporated into inflation expectations for the future.

More than twenty years ago I wrote an article, America's Peacetime Inflation: the 1970s challenging this standard near-consensus narrative as it had developed back then. The excursions of aggregate demand above levels consistent with full employment were few, short, and small. The incorporation of past inflation jumps into expectations of future inflation took place not rapidly but slowly. It took three large adverse supply shocks—the Yom Kippur War, the Iranian Revolution, and the 1970s productivity slowdown in the context of an economy in which unions still had substantial pricing power and previously-contracted wage increases. And even then more was required: hesitation on the part of central bankers, chiefly Arthur Burns, to commit to achieving price stability. Burns, rather, tended to (understandably) shrink from the consequence that focusing on price stability would bring deep recession, and to kick the can down the road in the hope that something would turn up. And so the stage was set for 1979, the Volcker Disinflation, and the Near-Great Recession of 1979-1982.

Yet, somehow, this actual history of what had happened was swallowed up by a peculiar and particular narrative. The narrative went and goes something like this:

Keynesian economists in the 1960s did not understand the natural rate of unemployment.

Hence they convinced central bankers and governments to run overly-expansionary policies that pushed aggregate demand above levels consistent with full employment.

And this sin against the Gods of the Market was followed by the natural retribution, in the form of high and persistent inflation.

This sin then had to be expunged by the sacrifice of the jobs and incomes of millions of workers via the Volcker Disinflation.

We must not allow economists and central bankers to commit this same sin of running overly expansionary policies again.

Why does this—not very true—story of what happened in the 1970s have such a hold on us? Why has it continued to have a hold even though it has been a bad guide to the economy since? Those relying on the 1970s and using their image of it to argue for imminent upward outbreaks of Global North inflation in the 1990s, 2000s, and now 2010s have all been wrong. The idea that the natural rate of unemployment was a stable parameter or, indeed, something that could be effectively estimated was also exploded by Staiger, Stock, and Watson more than twenty years ago. The belief that the Phillips Curve has a substantial slope did not survive Blanchard, Cerutti, and Summers. And the belief that the slope of the Phillips Curve was substantial even in the 1970s depends on one's averting one's eyes from the supply shocks of that decade, and thus attributing to demand events that are more plausibly attributed to supply.

Yet not the memory of what happened in the 1970s but rather the constructed image still has a powerful hold today. Why?

The best—although still inadequate, and highly, highly tentative—explanation of this that I have heard is that this story pattern fits with our cognitive biases. This story pattern is one we expect and like to hear. We appear to be pre-programmed at a deep level to seek for and resonate with stories of sin and retribution, crime and punishment, error and comeuppance. From whence this cognitive bias arises may launch many careers in psychology in the future. But we do not have to be prisoners of our heuristics and biases. And we should not be.

Donald Trump Is Playing to Lose: Live at Project Syndicatetag:typepad.com,2003:post-6a00e551f08003883401b8d2d94264970c2018-02-11T09:04:05-08:002018-02-11T09:04:05-08:00**Live at Project Syndicate**: [Donald Trump Is Playing to Lose](https://www.project-syndicate.org/commentary/unpopular-trump-infrastructure-plan-by-j--bradford-delong-2018-02): America certainly has a different kind of president than what it is used to. What distinguishes Donald Trump from his predecessors is not just his temperament and generalized ignorance, but also his approach to policymaking. Consider Bill Clinton, who in 1992 was, like Trump, elected without a majority of voters. Once in office, Clinton appealed to the left with fiscal-stimulus and health-care bills (both unsuccessful), but also tacked center with a pro-growth deficit-reduction bill. He appealed to the center right by concluding the North American Free Trade Agreement (NAFTA), which had been conceived under his Republican predecessors; and by signing a major crime bill. And he reappointed the conservative stalwart Alan Greenspan to chair the US Federal Reserve. Clinton hoped to achieve three things with this “triangulation” strategy... [READ MOAR at Project Syndicate](https://www.project-syndicate.org/commentary/unpopular-trump-infrastructure-plan-by-j--bradford-delong-2018-02)J. Bradford DeLong

Live at Project Syndicate: Donald Trump Is Playing to Lose: America certainly has a different kind of president than what it is used to. What distinguishes Donald Trump from his predecessors is not just his temperament and generalized ignorance, but also his approach to policymaking. Consider Bill Clinton, who in 1992 was, like Trump, elected without a majority of voters. Once in office, Clinton appealed to the left with fiscal-stimulus and health-care bills (both unsuccessful), but also tacked center with a pro-growth deficit-reduction bill. He appealed to the center right by concluding the North American Free Trade Agreement (NAFTA), which had been conceived under his Republican predecessors; and by signing a major crime bill. And he reappointed the conservative stalwart Alan Greenspan to chair the US Federal Reserve. Clinton hoped to achieve three things with this “triangulation” strategy... READ MOAR at Project Syndicate

When Globalization is Public Enemy Number One: No Longer Fresh at the Milken Institute Reviewtag:typepad.com,2003:post-6a00e551f08003883401b8d2b9da7f970c2018-02-11T08:51:27-08:002018-02-11T08:56:16-08:00***Milken Institute Review**: [When Globalization is Public Enemy Number One](http://www.milkenreview.org/articles/when-globalization-is-public-enemy-number-one): The first 30 years after World War II saw the recovery and reintegration of the world economy (the “Thirty Glorious Years,” in the words of French economist Jean Fourastié). Yet after a troubled decade — one in which oil shocks, inflation, near-depression and asset bubbles temporarily left us demoralized — the subsequent 23 years (1984-2007) of perky growth and stable prices were even more impressive as far as the growth of the world's median income were concerned. This period, dubbed the “Great Moderation,” was by most economists’ reckoning largely the consequence of the process of knitting the world together. The mechanism (and impact) was largely economic. But the consequences of globalization were also felt in cultural and political terms, accelerating the tides of change that have roughly tripled global output and lifted more than a billion people from poverty since 1990. So why is globalization now widely viewed as the tool of the sorcerer’s apprentice? I am somewhat flummoxed by the fact that a process playing such an important role in giving the world the best two-thirds of a century ever has fallen out of favor. But I believe that...J. Bradford DeLong

*Milken Institute Review: When Globalization is Public Enemy Number One: The first 30 years after World War II saw the recovery and reintegration of the world economy (the “Thirty Glorious Years,” in the words of French economist Jean Fourastié). Yet after a troubled decade — one in which oil shocks, inflation, near-depression and asset bubbles temporarily left us demoralized — the subsequent 23 years (1984-2007) of perky growth and stable prices were even more impressive as far as the growth of the world's median income were concerned.

This period, dubbed the “Great Moderation,” was by most economists’ reckoning largely the consequence of the process of knitting the world together. The mechanism (and impact) was largely economic. But the consequences of globalization were also felt in cultural and political terms, accelerating the tides of change that have roughly tripled global output and lifted more than a billion people from poverty since 1990.

So why is globalization now widely viewed as the tool of the sorcerer’s apprentice? I am somewhat flummoxed by the fact that a process playing such an important role in giving the world the best two-thirds of a century ever has fallen out of favor. But I believe that most of the answer can be laid out in three steps:

The past 40 years have not been bad years, but they have been disappointing ones for the working and middle classes of what we now call the “Global North” (northwestern Europe, America north of the Rio Grande and Japan).

There is a prima facie not implausible argument linking those disappointing outcomes for blue-collar workers to ongoing globalization.
* In any complicated policy debate that becomes politicized, the side that blames foreigners has a very powerful edge. Politicians have a strong incentive to pin it on people other than themselves or those who voted for them. The media, including the more fact-based media, tend to let elected officials set the agenda.

Hence it doesn’t take much of a crystal ball to foresee a few decades of backlash to globalization in our future. More of what is made will probably be consumed at home rather than linked into global supply chains. Businesses, ideas and people seeking to cross borders will face more daunting barriers.

Some of the consequences are predictable. The losses to income created by cross-border barriers to competition will grow. And more of the focus of economic policy will be on the division of the proverbial pie rather than how to make it larger. Small groups of well-organized winners will take income away from diffuse and unorganized groups of losers.

Measured in absolute numbers, an awful lot of wealth will be lost. But those losses won’t approach, say, the scale of the output foregone in the Great Recession. Figure on a 3 percent reduction in income, equivalent to the loss of two years’ worth of growth in the advanced industrialized economies.

Most well-educated Americans, I suspect, will either be net beneficiaries of the reshuffling of income or won’t lose enough to notice. Disruption often redounds to the benefit of the sophisticated who can see it coming in time to get out of the way or turn it to their own advantage. But that’s a minority of the population, even in rich countries. Real fear about where next week’s mac and cheese is going to come from applies for a tenth, while fear about survival through the hard times is still a thing for a quarter of humanity.

Why do I believe all this? Bear with me, for my explanation demands an excursion down the long and winding road of centuries of globalization.

Globalization in Historical Perspective: On the brilliant date-visualization website, Our World in Data, Oxford researcher Esteban Ortiz-Ospina, along with site founder Max Roser, has plotted best estimates of the relative international “trade intensity” of the world economy — the sum of exports and imports divided by total output over a very long time. In my reproduction I have divided the years since 1800 into four periods and drawn beginning- to end-of-period arrows for each.

In the years from 1800 to 1914, which I call the First Globalization, world trade intensity tripled, driven mostly by exchange between capital-rich, labor-intensive and resource-rich regions. Countries with both sorts of endowments benefit by specializing production in their areas of comparative advantage. Meanwhile, huge migrations of (primarily) people and (secondarily) financial capital to resource-rich regions established a truly integrated global economy for the first time in history.

The period from 1914 to 1945 saw a dramatic retreat, with the relative intensity of international trade slipping back to little more than its level in 1800. There are multiple, complementary explanations for this setback. Faster progress in mass production than in long-distance transport made it efficient to bring production back home to where the demand was. The Great Depression created a path of least political resistance in which governments sought to save jobs at home at the expense of trading partners. And wars both blocked trade and made governments leery of an economic structure in which they had to rely on others.

This retrenchment, however, was reversed after World War II. The years 1945 to 1985 saw the Second Globalization, which carried trade intensity well above its previous high tide in the years before World War I. But this time, the bulk of trade growth was not among resource-rich, capital-rich and labor-intensive economies exchanging the goods that were their comparative advantage in production. It largely took place within the rich Global North, as industrialized countries developed communities of engineering expertise that gave them powerful comparative advantages in relatively narrow slices of manufacturing production in everything from machine tools (Germany) to consumer electronics (Japan) to commercial aircraft (the United States).

After 1985, however, there was a marked shift to what Ortiz-Ospina calls “hyperglobalization.” Multinational corporations began building their international value chains across crazy quilts of countries. The Global South’s low wages gave it an opportunity to bid for the business of running the assembly lines for products designed and engineered in the Global North. Complementing this value-chain-fueled boost to world trade came the other aspects of hyperglobalization: a global market in entertainment that created the beginnings of a shared popular culture; a wave of mass international migration and the extension of northern financial markets to the Global South, cutting the cost of capital and increasing its volatility even as it facilitated portfolio diversification across continents.

Hyperglobalization, Up Close and Personal: Of these value-chain-fueled boosts to international trade, perhaps the first example was the U.S.-Mexico division of labor in the automobile industry enabled by the North American Free Trade Agreement of the early 1990s. The benefits were joined to the more standard comparative-advantage-based benefits of reduced trade barriers. At the 2017 Milken Institute Global Conference, Alejandro Ramírez Magaña, the founder of Cinépolis, the giant Mexican theater group that is investing heavily in the United States, summed up the views of nearly all the economists and business analysts in attendance:

Between the U.S. and Mexico, trade has grown by more than six-fold since 1994 … 6 million U.S. jobs depend on trade with Mexico. Of course, Mexico has also enormously benefited from trade with the U.S.… We are actually exporting very intelligently according to the relative comparative advantage of each country. Nafta has allowed us to strengthen the supply chains of North America, and strengthened the competitiveness of the region...

Focus on the reference to "supply chains". Back in 1992, my friends on both the political right and left feared—really feared—that Nafta would kill the U.S. auto industry. Assembly-line labor in Hermosillo, Mexico had such an enormous cost advantage over assembly-line labor in Detroit or even Nashville that the bulk of automobile manufacturing labor and value added was, they claimed, destined to move to Mexico. There would be, in the words of 1992 presidential candidate Ross Perot, “a giant sucking sound,” as factories, jobs and prosperity decamped for Mexico.

But that did not happen. Only the most labor-intensive portions of automobile assembly moved to Mexico. And by moving those segments, GM, Ford and Chrysler found themselves in much more competitive positions vis-a-vis Toyota, Honda, Volkswagen and the other global giants.

Fear of Globalization: Barry Eichengreen, my colleague in the economics department at Berkeley, wrote that there is unlikely to be a second retreat from globalization:

U.S. business is deeply invested in globalization and would push back hard against anything the Trump administration did that seriously jeopardized Nafta or globalization more broadly. And other parts of the world remain committed to openness, even if they are concerned about managing openness in a way that benefits everyone and limits stability risks that openness creates...

But I see another retreat as more likely than not. For one thing, anti-globalization forces have expanded to include the populist right as well as the more familiar populist left. It was no surprise when primary contender Bernie Sanders struck a chord by condemning Nafta and the opening of mass trade with China as “the death blow for American manufacturing.” But it was quite another matter when the leading Republican candidate (and now president) claimed that globalization would leave “millions of our workers with nothing but poverty and heartache” and that Nafta was “the worst deal ever” for the United States.

The line of argument is clear enough. Globalization, at least in its current form, has greatly expanded trade. This has decimated good (high-paying) jobs for blue-collar workers, which has led to a socioeconomic crisis for America’s lower-middle class. U.S. Trade Representative Robert Lighthizer buys this:

Nafta has fundamentally failed many, many Americans. … [Trump] is not interested in a mere tweaking of a few provisions and a couple of updated chapters. … We need to ensure that the huge [bilateral trade] deficits do not continue, and we have balance and reciprocity...

It’s conceivable that the Trump administration will yet pay homage to the post-World War II Republican Party’s devotion to open trade. But it seems unlikely in light of the resonance protectionism has had with Trump supporters. And if the Trump administration proves not to be a bellwether on globalization, it is surely a weathervane.

The Real Impact of Globalization: Portions of the case against globalization have some traction. It is, indeed, the case that the share of employment in the sectors we think of as typically male and typically blue-collar has been on a long downward trend. Manufacturing, construction, mining, transportation and warehousing constituted nearly one-half of nonfarm employment way back in 1947. By 1972, the fraction had slipped to one-third, and it is just one-sixth today.

But consider what the graph does not show: the decline (from about 45 percent to 30 percent) in the share of these jobs from 1947 to 1980 was proceeding at a good clip before U.S. manufacturing faced any threat from foreigners. And the subsequent fall to about 23 percent by the mid-1990s took place without any “bad trade deals” in the picture. The narrative that blames declining blue-collar job opportunities on globalization does not fit the timing of what looks like a steady process over nearly three-quarters of the last century.

Wait, there’s a second disconnect. Look at the way the declines in output divide among the sub-sectors (see page 29). Manufacturing was about 15 percent of nonfarm production in the mid-1990s and was still about 14 percent at the end of 2000, even as trade with Mexico and China accelerated into hyperdrive. Indeed, the bulk of the fall in “men’s work” has been in construction, which represented 7 percent of private industry production in 1997 and represents just 4 percent today. Warehousing and transportation have also taken a big hit in terms of proportion.

The biggest factors on the real production side over the past 20 years have not been the out-migration of manufacturing, but the depression of 2007-10 and the dysfunction of the construction finance market that continues to this day.

The China Shock: The case that the workings of globalization have had a major destructive effect on the employment opportunities of blue-collar men over the past two decades received a major intellectual boost from the research of David Autor, David Dorn and Gordon Hanson on the impact of the “China shock.”

One of their bottom lines is that the loss of some 2.4 million American manufacturing jobs “would have been averted without further increases in Chinese import competition after 1999.” Moreover, the effects on workers and their communities were dislocating in a way in which manufacturing job loss generated by incremental improvements in productivity not associated with factory closings was not.

The China shock was very real and very large: its significance shouldn’t be discounted, especially in the context of a close presidential election whose outcome may have a large, enduring impact on the United States — and, for that matter, the world. But some perspective is needed if one is to allow the tale of the China shock to influence thinking about globalization.

Start with the fact that, in most ways, this is a familiar story in the American economy that long preceded the rise of China. Dislocation associated with the relocation of production facilities is more damaging to people and places than incremental changes in production processes, whether the movement is across state lines or across continents.

When my grandfather and his brothers closed down the Lord Bros. Tannery in Brockton, Massachusetts to reopen in lower-wage South Paris, Maine, the move was a disaster for the workers and the community of Brockton — and a major boost for South Paris. When, a decade and a half later, my grandfather found he could not make a go of it in South Paris and started a new business in Lakeland, Florida, it was the workers and the community of South Paris who suffered.

The fact that, in the case of globalization-driven dislocation, the jobs cross international borders adds some wrinkles, but not all of them are obvious. As demand shifts, jobs vanish for some in some locations and open for others in other locations. Dollars that in the past were spent purchasing manufactures from Wisconsin and Illinois and are now spent purchasing manufactured imports from China do not vanish from the circular flow of economic activity. The dollars received by the Chinese still exist and have value to their owners only when they are used to buy American-made goods and services.

Demand shifts, yes — but the dollars paid to Chinese manufacturing companies eventually reappear as financing for, say, new apartment buildings in California or to pay for a visit to a dude ranch in Montana or even to buy an American business that otherwise might close. GE, which had been openly seeking a way to offload its household appliance division for many years, sold the business to the Chinese firm Haier, the largest maker of appliances in the world. How different might the world have been for the employees of White-Westinghouse who were making appliances if a Chinese firm had been trolling the waters for an acquisition before the brand disappeared for good in 2006?

Only with the coming of the Great Recession do we see not blue-collar job churn but net blue-collar job loss in America. And that was due to the government’s failure to properly regulate finance to head off the housing meltdown, the subsequent failure to properly intervene in financial markets to prevent depression, and the still later failure to pursue policies to rapidly repair the damage.

All that said, the connection between the China shock in the 2000s and increasing blue-collar distress in the 2000s on its face lends some plausibility to the idea that globalization bears responsibility for most of their distress, and needs to be stopped.

The Globalization Balance Sheet: Last winter, in a piece for http://vox.com, I made my own rough assessment of the factors responsible for the 28 percentage point decline in the share of sectors primarily employing blue-collar men since 1947. I attributed just 0.1 percentage points to our “trade deals,” 0.3 points to changing patterns of trade in recent years (primarily the rise of China), 2 percentage points to the impact of dysfunctional fiscal and monetary policies on trade, and 4.5 percent to the recovery of the North Atlantic and Japanese economies from the devastation of World War II. I attributed the remaining 21 percentage points to labor-saving technological change.

This 21 percentage points has very little to do with globalization. Yes, with low barriers to trade, technology allows foreign exporters to make better stuff at lower cost. But American producers have the parallel option to sell them better stuff for less. And thanks to technology, consumers on both sides get more good stuff cheap. Economists slaving away in musty offices can invent scenarios in which technological change favors foreign producers over their American counterparts and thereby directly costs blue-collar jobs. But the assumptions needed to get that result are highly unrealistic.

To repeat, because it bears repeating: globalization in general and the rise of the Chinese export economy have cost some blue-collar jobs for Americans. But globalization has had only a minor impact on the long decline in the portion of the economy that makes use of high-paying blue-collar labor traditionally associated with men.

Why is this View so Hard to Sell?: Pascal Lamy, the former head of the World Trade Organization, likes to quote China’s sixth Buddhist patriarch: “When the wise man points at the moon, the fool looks at the finger.” Market capitalism, he says, is the moon. Globalization is the finger.

In a market economy, the only rights universally assured by law are property rights, and your property rights are only worth something if they give you control of resources (capital, land, etc.) — and not just any resources, but scarce resources that others are willing to pay for. Yet most people living in market economies believe their rights extend far beyond their property rights.

The way mid-20th century sociologist Karl Polanyi put it, people believe that they have rights to land whether they own the land or not — that the preservation and stability of their community is their right. People believe that they have rights to the fruits of labor — that if they work hard and play by the rules they should be able to reach the standard of living they expected. People believe that they have rights to a stable financial order — that their employers and jobs should not suddenly disappear because financial flows have been withdrawn at the behest of the sinister gnomes of Zurich or some other tribe of rootless cosmopolites.

Dealing with these hard to define, sometimes conflicting claims to rights beyond property is one of the major political-rhetorical-economic challenges of every society that is not stagnant. And blaming globalization for the unfulfilled claims of this group or that is a very handy way to pass the buck.

The good news is that, whatever the merits of the grievances of those who see themselves as losers in a globalizing economy, sensible public policy could go a long way to making them whole. Three keys would open the lock:

The failure of regional markets to sustain good jobs could be managed by much more aggressive social-insurance — unemployment, moving allowances, retraining and the like — along with the redistribution of government resources to create jobs where they have been lost.

More aggressive fiscal measures to keep job markets tight.

Karl Polanyi’s key remains at hand, too. While many Americans claim to worship at the altar of free markets, they still believe that they have all kinds of extra socioeconomic rights — to healthy communities, to stable occupations, to appropriate and rising incomes — that are not backed up by property rights. Governments could intervene on their behalf.

That way lies tyranny, we’ve been told, but also very high-functioning social democracies like Sweden, Germany and the Netherlands.

The bad news, of course, is that the public policies needed to soothe the grievances blamed on globalization seem further out of reach today than they were decades ago. Probably the best one can hope for is that the fever subsides sufficiently to allow for a realistic debate over who owes what to whom.

Jupyter Notebook Programming Dos and Don'ts: A Running Listtag:typepad.com,2003:post-6a00e551f08003883401b8d2d90d54970c2018-02-10T10:58:03-08:002018-02-10T11:03:12-08:00What else should I add to this? **Programming Dos and Don'ts: A Running List...** 1. **Do** restart your kernel and run cells up to your current working point every fifteen minutes or so. Yes, it takes a little time. But if you don't, sooner or later the machine's namespace will get confused, and then you will get confused about the state of the machine's namespace, and by assuming things about it that are false you will lose hours and hours... 2. **Do** edit code cells by copying them below your current version and then working on the copy: when you break everything in the current cell (as you will), you can then go back to the old cell and start fresh... 3. **Do** exercise agile development practices: if there is a line of code that you have not tested, test it. The best way to test is to ask the machine to echo back to you the thing you have just created in its namespace to make sure that it is what you want it to be... 4. **Do** take screenshots of your error messages... 5. **Do** google your error messages: ms. google is your best friend here... 6. **Do...J. Bradford DeLong

What else should I add to this?

Programming Dos and Don'ts: A Running List...

Do restart your kernel and run cells up to your current working point every fifteen minutes or so. Yes, it takes a little time. But if you don't, sooner or later the machine's namespace will get confused, and then you will get confused about the state of the machine's namespace, and by assuming things about it that are false you will lose hours and hours...

Do edit code cells by copying them below your current version and then working on the copy: when you break everything in the current cell (as you will), you can then go back to the old cell and start fresh...

Do exercise agile development practices: if there is a line of code that you have not tested, test it. The best way to test is to ask the machine to echo back to you the thing you have just created in its namespace to make sure that it is what you want it to be...

Do take screenshots of your error messages...

Do google your error messages: ms. google is your best friend here...

Do not confuse assignment ("=") and test for equality ("=="). In general, if there is an "if" anywhere nearby, you should be testing for equality. If there is not, you should be assignment a variable in your namespace to a value. Do curse the mathematicians 500 years ago who did not realize that in the twenty-first century it would be very convenient if we had different and not confusable symbols for equals-as-assignment and equals-as-test...

Being a long time historical materialist of some flavor or another, I am by orientation hostile to arguments like Mokyr's that it was ideas and culture that ultimately mattered. I find myself very suspicious of arguments that give a unique value to cultures, especially when they are my own. I tend to appeal instead to principles of representativeness—that I should not assume that I or anything of mine is special without very good reason—of non-cherrypicking—do not accentuate the positive while neglecting the negative—and of visibility—that of requiring concrete causal mechanisms, rather than waving one's hands, saying "it was in the air" and "there are lots of other ways it matters besides those that have been mentioned here".

That does not mean that I am right.

Mokyr ends his 2016 A Culture of Growth: The Origins of the Modern Economyhttp://amzn.to/2c9TJ2y with a broadside against people like me. He denounces us as:

tak[ing] a very narrow view of what the Industrial Revolution was about, [for] the mechanisms by which the Republic of Letters affected technological progress are deeper and more complex than “how much science was needed to build a spinning jenny”. Science plays an ever-growing role in the subsequent history of industrialization.... Without the Republic of Letters and the changing agenda of science... [any wave of European growth] would have been short-lived and fizzled out after 1815 or so...

Mokyr's is also an "eye of the needle" theory—that if we had not had the Western European Enlightenment, we would still be back in the Bad Old Days, under the harrow of Thomas Robert Malthus, with the bulk of the world's population living on 2 dollars a day, with global population growth averaging 10-20% per century eating up the power of technology and organization to raise living standards, with a world population of 1.2 billion or so of whom 70% would be near-subsistence farmers.

It is certainly possible that Mokyr is right. It is also possible that both Mokyr and Allen are right—that their were two needles, and two eyes to be threaded in the late second millennium: a "supply of inventive ideas" eye-of-the-needle threaded by the Enlightenment and the Republic of Letters, and a "demand for inventive ideas" eye-of-the-needle threaded by wages, coal, and steam. But that doubles our current improbability. And, as I said above, I tend toward a heuristic of representativeness—that we should not presume we are special without very good evidence. And so amplifying the unlikelihood of our current selves does not appeal to me. I tend more towards "two heads are better than one" theories—that once we had language, agriculture and then writing and printing eventually were nearly inevitable, and then increasing returns would set in and would eventually overwhelm Malthus given our biology.

Some questions:

What is modern economic growth?

Is it separate from the Industrial Revolution?

Why doesn't Mokyr have more adherents to his point of view?

Why does he have the adherents he does?

How interested was European elite culture in what we would call "science"?

How interested were Europe's middle classes in what we would call products of "technology"?

How interested were Europe's governments in what we would call products of "technology"?

What was the "Republic of Letters"?

What did people know by 1800 that they had not known in 1400?

How much difference, economically, could that extra knowledge have made?

How much of that extra knowledge about how to make things could have been due to the Republic of Letters?

How much of the extra knowledge about how to go about making things better could have been due to the Republic of Letters?

How much of a gap was there between the Enlightenment Era Republic of Letters and previous—Chinese, Indian, Islamic, Roman, Greek—high literary cultures?

Joel Mokyr's (2016) A Culture of Growth: The Origins of the Modern Economy (Princeton, NJ: Princeton University Press: 9780691167773: http://amzn.to/2c9TJ2y), published in October 2016, is the latest and most successful extended brief by Northwestern University economic historian Joel Mokyr for his point of view on the causal origins of modern economic growth.

What is modern economic growth?

As best as we can conceptualize and measure (or perhaps it would be more honest to say: "guess"), average human material living standards and economic productivity levels today are some twenty times what they were in the agricultural-age span from ca. 6000 BCE to 1500 CE. The efficiency with which we collectively use technology and organization to transform human and nonhuman resources into useful commodities is currently growing at a rate of about 2%/year, perhaps 100 times the rate common during the agricultural age. Some do believe that the 2%/year global pace of modern economic growth will slow in the future. But very few indeed see it coming to any sort of rapid end--barring, of course, thermonuclear war or equivalent catastrophe.

Joel Mokyr is one of the leaders of the school of thought that sees the causal origins of modern economic growth in the emergence in Europe from 1500-1750 of a highbrow elite dominant culture of intellectuals favorable to and focused on the cumulative increase of knowledge and its application to projects of human betterment. This school has plausible arguments. But do note that it is far from being a rough consensus, a majority opinion, or even a plurality.

What are the other schools? They see the causal origins of first the industrial revolution in the British midlands and then of modern economic growth in:

an emergent scale effect on the pace of technological invention, innovation, adaptation, and deployment from a post-Neolithic Revolution slow accumulation of knowledge that supported growing--albeit poor--populations thinking about problems of improving productive efficiency;

the emergence in Britain over 1500-1750 of "developmental" as opposed to the more typical agrarian-age "extractive" institutions--an emergence that then set in motion a virtuous circle of growth.

the emergence in Britain over 1500-1750 of institutions that were "extractive plus investing", as opposed to more typical agrarian-age institutions less successful at extracting resources from the bulk of the population via oppression
and then devoted not to positive-sum investment in the future but to zero- or negative-sum contests;

the sheer luck of having very large supplies of near-surface coal on navigable waterways in Britain just when the luck of geography, religious, and political history had generated high enough real wages to make the development of first-generation steam engines profitable;

pure luck of some other form;

a combination of more than one of the above factors; or

a set of related factors that do not map neatly onto the conceptual categories in which human thought about the causes of the industrial revolution and modern economic growth has moved.

Does it matter? Mokyr would say that any Republic of Letters--Invisible College--Marketplace of Ideas--that thinks that an important question to ask is highly unlikely to have been compatible with the origins or with the continued maintenance for long of modern economic growth.

Is Mokyr's argument correct? I tend to think the balance of the probabilities favors (4) myself. But I do not think that there will ever be a near-consensus on the issue. And I would not be surprised if Mokyr's brief--for it is a brief, and not a balanced presentation of live possibilities--were broadly correct.

The central axis around which Mokyr's argument turns is the emergence from 1450-1750 of the so-called "Republic of Letters": a single elite-level "market for ideas" spanning the European continent. Intellectuals competed for reputation and patronage. Reputation was gained by creating and disseminating ideas (rather than knowing and keeping secrets). Ideas were valued by their testable correspondence with reality. Patronage (mostly) followed reputation, rather than (typically) being gained by flattering the powerful. The political fragmentation of Europe meant that individual rulers could not suppress thought. The ideological unity of the Republic of Letters meant that the community of intellectuals had a full sub-continent wide scale.

No other civilization had ever developed a set of institutional practices followed by its intellectual cadre that was so effective at generating incentives to create, discuss, modify, test, disseminate, and use ideas. The European Republic of Letters had not before 1800 outstripped either of its Chinese, Indian, or Islamic world counterparts in terms of the number of its members or the ferocity with which they sought "knowledge". Yet there was no comparison between them in the amount of valid scientific or applicable technological knowledge that had been generated in the roughly three centuries that this divergence had had to build.

Mokyr's chain of argument concludes with a broadside against those who have been rejecting his school of thought by demanding clear, obvious, strong linkages between the writings of the thinkers of the Republic of Letters of the Age of Enlightenment and actual on-the-ground new installed technologies. He says that we:

take a very narrow view of what the Industrial Revolution was about, [for] the mechanisms by which the Republic of Letters affected technological progress are deeper and more complex than “how much science was needed to build a spinning jenny”. Science plays an ever-growing role in the subsequent history of industrialization.... Without the Republic of Letters and the changing agenda of science... [any wave of European growth] would have been short-lived and fizzled out after 1815 or so...

"Republic of Letters" "Invisible College" "Economy of prestige and priority" that fuels enormous amounts of high-class and high-caliber intellectual work in a broad range of theoretical and applied natural science and sciency disciplines...

Truth filter... -- community that applies a truth filter (and a usefulness filter) in a way that other communities do not...

Eye-of-the-needle: We need really cheap coal near water at a time of advanced mechanical clockmaking when wages are far above standard Malthusian levels because James II Stuart turned Catholic, was exiled, was supported by Louis XIV, so the ex-monastery owning British landlords of Downton Abbey were willing to tax themselves to fund a navy that conquered the seas and channeled all of the surplus from plantation slavery plus into Bristol and London; plus we need Republic of Letters...

But why does Mokyr see the Allen story not as complementary with his, but as largely wrong?

Do you need the ivory tower for general purpose technologies?
Anything for which demand is highly price elastic?
Jacquard loom as textile innovation where demand is not so elastic?

Ancient world more urbanized than northwest Europe up to 1680 or so... -- why Mokyr comes out thinking that the ancient world's Republic of Letters was lacking...

Strongest point of Mokyr's: Republic of Letters essential for MEG, even if not essential for CR or IR or "watchmaking"...

The Newton bubble—lots of people want to be like Newton was, and they do a huge amount of good work...

Newton focused RoL on "practical" things—Bacon too—

I should go back and reread David Landes's Revolution in Time: why in a medieval or early modern city with church bells would you spend money on a watch, anyway? What symbolic community did it place you in? Buying a watch then like buying a Tesla today?

Did people want watches because Newton was cool?

Luigi Pascale: Steam and marine chronometers...

Moses Finley... <== save for Temin week?

Why not Islam?

"Closing of the Gates" of interpretation, but also of "research" into natural sciences and associated technologies and so forth...

Read Eric Chaney: Religion and the Rise and Fall of Muslim Science

Wait for Eric Chaney: Scientific Revolution: Measuring the Intellectual Rise of the Western World

Free Riding, Unions, and "Right-to-Work"tag:typepad.com,2003:post-6a00e551f08003883401b7c9474f9f970b2018-01-20T06:09:34-08:002018-01-20T06:09:34-08:00[_Amici Curiae_ in Janus v. AFSCME](https://www.supremecourt.gov/DocketPDF/16/16-1466/28326/20180118155219419_16-1466%20bsac%20Economists%20and%20Professors%20of%20Law%20and%20Economics.pdf): No. 16-1466 :: In the Supreme Court of the United States :: MARK JANUS, Petitioner, v. AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES, COUNCIL 31, ET AL., Respondents. On Writ of Certiorari to the United States Court of Appeals for the Seventh Circuit: Henry J. Aaron, Katharine G. Abraham, Daron Acemoglu, David Autor, Ian Ayres, Alan S. Blinder, David Card, Kenneth G. Dau-Schmidt, Angus Stewart Deaton, Bradford DeLong, John J. Donohue III, Ronald G. Ehrenberg, Henry S. Farber, Robert H. Frank, Richard B. Freeman, Claudia Goldin, Robert J. Gordon, Oliver Hart, David A. Hoffman, Lawrence F. Katz, Thomas A. Kochan, Alan Krueger, David Lewin, Ray Marshall, Alexandre Mas, Eric S. Maskin, Alison D. Morantz, J.J. Prescott, Jesse Rothstein, Cecilia Elena Rouse, Jeffrey D. Sachs, Stewart J. Schwab, J.H. Verkerke, Paula B. Voos, David Weil: BRIEF OF AMICI CURIAE ECONOMISTS AND PROFESSORS OF LAW AND ECONOMICS IN SUPPORT OF RESPONDENTS: **INTRODUCTION**: _Amici curiae_ are leading economists, including three Nobel laureates, along with distinguished professors of law and economics, who submit this brief to discuss the free-rider problem this Court identified in Abood v. Detroit Board of Education, 431 U.S. 209 (1977).1 In Abood, the...J. Bradford DeLong
<div xmlns="http://www.w3.org/1999/xhtml"><p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b8d2d19e01970c-pi" alt="Mancur Olson" title="Mancur_Olson.png" border="0" width="476" height="160" /></p>
<p><span style="text-transform: uppercase;"><a href="https://www.supremecourt.gov/DocketPDF/16/16-1466/28326/20180118155219419_16-1466%20bsac%20Economists%20and%20Professors%20of%20Law%20and%20Economics.pdf"><em>Amici Curiae</em> in Janus v. AFSCME</a></span>: No. 16-1466 :: In the Supreme Court of the United States :: MARK JANUS, Petitioner, v. AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES, COUNCIL 31, ET AL., Respondents. On Writ of Certiorari to the United States Court of Appeals for the Seventh Circuit:</p>
<p>Henry J. Aaron, Katharine G. Abraham, Daron Acemoglu, David Autor, Ian Ayres, Alan S. Blinder, David Card, Kenneth G. Dau-Schmidt, Angus Stewart Deaton, Bradford DeLong, John J. Donohue III, Ronald G. Ehrenberg, Henry S. Farber, Robert H. Frank, Richard B. Freeman, Claudia Goldin, Robert J. Gordon, Oliver Hart, David A. Hoffman, Lawrence F. Katz, Thomas A. Kochan, Alan Krueger, David Lewin, Ray Marshall, Alexandre Mas, Eric S. Maskin, Alison D. Morantz, J.J. Prescott, Jesse Rothstein, Cecilia Elena Rouse, Jeffrey D. Sachs, Stewart J. Schwab, J.H. Verkerke, Paula B. Voos, David Weil: BRIEF OF AMICI CURIAE ECONOMISTS AND PROFESSORS OF LAW AND ECONOMICS IN SUPPORT OF RESPONDENTS:</p>
<p><strong>INTRODUCTION</strong>: <em>Amici curiae</em> are leading economists, including three Nobel laureates, along with distinguished professors of law and economics, who submit this brief to discuss the free-rider problem this Court identified in Abood v. Detroit Board of Education, 431 U.S. 209 (1977).1 In Abood, the Court declined to interfere with legislative decisions that collecting fees from employees who are covered by union agreements, but are not union members, helps “distribute fairly” the costs of union representation “among those who benefit.” Id. at 222. Fair-share fees counteract “the incentive that employees might otherwise have to become ‘free riders’—to refuse to contribute to the union while obtaining benefits of union representation that necessarily accrue to all employees.” Id.</p>
<p>Petitioner seeks to overturn Abood by arguing that nonmembers who are required to pay fair-share fees are “forced riders.” Pet. Br. 53. According to Petitioner, employees who believe they benefit from the union will join it and pay their dues, whereas nonmembers seek to avoid paying fair-share fees based on their alleged “beliefs that they do not benefit from a union’s advocacy.” Id. at 52. Petitioner asserts that those purported beliefs “cannot be second guessed.” Id.</p>
<p>If nonmembers’ beliefs cannot be second guessed, however, they also cannot be presumed without any evidentiary basis, especially not as a pretext for overturning forty years of precedent; interfering with states’ legislative decisions; and, under the guise of the First Amendment, presumptuously attributing beliefs to millions of people who do not actually hold those beliefs. Petitioner has not provided any evidence to support his assumptions about nonmembers’ allegedly common beliefs and motivations with regard to unions and their fees. That evidentiary failure should be fatal because Petitioner’s assumptions contradict decades, if not centuries, of economic theory and empirical evidence. As Mancur Olson demonstrated, a rational employee motivated solely by economic self-interest will withhold union dues or fair-share fees if he can do so without incurring countervailing costs—even if he benefits from the union, believes he benefits, and agrees with the union’s actions on his behalf— because his fees “alone would not perceptibly strengthen the union, and since he would get the benefits of any union achievements whether or not he supported the union.” Mancur Olson, The Logic of Collective Action 88 (2d ed. 1971).</p>
<p>The existence of such free-rider problems is well established, including among conservative economists. See, e.g., Milton Friedman, Capitalism and Freedom 23 (1962); Thomas Sowell, Basic Economics 433-36 (4th ed. 2011); Walter J. Wessels, Economics 536-37 (4th ed. 2006). Free-rider problems, and collective-action problems more generally, “are not mere curiosities, paradoxes, or aberrations of otherwise efficient markets. They underlie every aspect of human activity and have profound political and economic consequences.” Marek M. Kaminski, The Collective Action Problems of Political Consolidation: Evidence from Poland, in Collective Choice 71, 71 (Jac C. Heckelman &amp; Dennis Coates eds., 2003).</p>
<p>Indeed, free-rider problems were nearly fatal to the Union under the Articles of Confederation, as Alexander Hamilton observed. The notion “that a sense of common interest would preside over the conduct of the respective members, and would beget a full compliance with all the constitutional requisitions of the Union,” was disproven by “that best oracle of wisdom, experience,” as contrary to “the true springs by which human conduct is actuated.” The Federalist No. 15, at 110 (Alexander Hamilton) (Clinton Rossiter ed., 1961). Despite their common interests, each member “yielding to the persuasive voice of immediate interest or convenience has successively withdrawn its support, till the frail and tottering edifice seems ready to fall upon our heads and to crush us beneath its ruins.” Id. at 112-13.</p>
<p>What was true of the Union is also true of unions. Unless ameliorated by fair-share fees, the free-rider problem will leave unions weaker than employees (union members and nonmembers alike) would choose. Where fair-share fees are eliminated, in so-called Right to Work (“RTW”) jurisdictions, nonmembers’ withholding of financial support does not imply antipathy to unions. Instead, it follows from individual self-interest and the collective nature of the benefits unions provide, even in the absence of any disagreement about those benefits. That is the essence of the free-rider problem.</p>
<p>&nbsp;</p>
<p><strong>SUMMARY OF THE ARGUMENT</strong>: Petitioner’s assertion that fair-share fees are unnecessary, and his assumption that employees seek to avoid paying fair-share fees because of commonly-held “beliefs that they do not benefit from a union’s advocacy,” Pet. Br. 52, are incorrect and unfounded. In fact, “rational, self-interested individuals” often “will not act to achieve their common or group interests,” even when they agree about those common interests and how to achieve them. Olson, supra, at 2 (emphasis in original). This is not only well established in economic theory, it is also confirmed by empirical data—including the results of recent union-recertification elections.</p>
<p>&nbsp;</p>
<p><strong>ARGUMENT</strong>: <em>I. Early discussions of free-rider problems</em>: Mancur Olson’s work on free-rider problems is seminal because he analyzed them using the formal tools of modern economics, but such problems were well recognized long before 1965, when Olson first published The Logic of Collective Action. In 1738, for example, David Hume observed that two neighbors might easily agree to work together to drain a meadow, but “it is very difficult, and indeed impossible, that a thousand persons should agree in any such action,” because each would seek “a pretext to free himself of the trouble and expence, and would lay the whole burden on others.” David Hume, A Treatise of Human Nature 366 (Cavalier Classics 2015) (1738). “Here then is the origin of civil government and society. Men are not able radically to cure, either in themselves or others, that narrowness of soul,” but may agree to provide “security” against each others’ “weakness and passion, as well as against their own,” through government, which “forces them to seek their own advantage, by a concurrence in some common end or purpose.” Id. at 365.</p>
<p>As already mentioned, Alexander Hamilton discussed the free-rider problems the states faced under the Articles of Confederation. See The Federalist No. 15 (Alexander Hamilton). Likewise, James Madison argued that “the radical infirmity of the ‘Articles of Confederation’ was the dependence of Congress on the voluntary and simultaneous compliance with its requisitions by so many independent communities, each consulting more or less its particular interests and convenience, and distrusting the compliance of the others.” 2 Papers of James Madison 692 (Henry D. Gilpin, ed., 1840). Madison “came to view free-riding as the central vice of the Confederation,” and his reasoning is remarkably similar to that of “modern public goods theorists, such as Mancur Olson.” Keith L. Dougherty, Madison’s Theory of Public Goods, in James Madison 41, 43, 57 (Samuel Kernell, ed., 2003); see also Keith L. Dougherty, Collective Action under the Articles of Confederation (2001).</p>
<p>John Stuart Mill also recognized that the “interference of law” is sometimes required, “not to overrule the judgment of individuals respecting their own interest, but to give effect to that judgment.” John Stuart Mill, Principles of Political Economy Books IV and V 329 (Penguin Classics 1985) (1848). Suppose factory workers, bargaining collectively, could limit the length of their workday without a significant reduction in wages. “If this would be the result, and if the operatives generally are convinced that it would, the limitation, some may say, will be adopted spontaneously.” Id. But “it will not be adopted unless the body of operatives bind themselves to one another to abide by it,” because however convinced a worker may be that “it is the interest of the class to work short time, it is contrary to his own interest to set the example, unless he is
well assured that all or most others will follow it.” Id. Thus, “there might be no means of attaining this object but by converting their supposed mutual agreement into an engagement under penalty, by consenting to have it enforced by law.” Id. at 330.</p>
<p>More recently—but still a few years before Olson published The Logic of Collective Action—Milton Friedman explained that “I cannot get the amount of national defense I want and you, a different amount. With respect to such indivisible matters we can discuss, and argue, and vote. But having decided, we must conform.” Friedman, supra, at 23.</p>
<p>&nbsp;</p>
<p><em>II. The Logic of Collective Action</em>: Olson began The Logic of Collective Action with the observation that it is “often taken for granted, at least where economic objectives are involved, that groups of individuals with common interests usually attempt to further those common interests.” Olson, supra, at 1. It is likewise often assumed, as Petitioner assumes here, that if a member of a group does not act to further the group’s interests, he or she must not agree with the group. See id. at 85. These assumptions not only underlie Petitioner’s brief, they also underlie Marxism, anarchism, and pluralism, as Olson explained. See id. at 102-31. But the shared assumption of these disparate theories— that rational individuals voluntarily advance collective interests—is often false. For example, “despite the force of patriotism, the appeal of the national ideology, the bond of a common culture, and the indispensability of the system of law and order, no major state in modern history has been able to support itself through voluntary dues or contributions.” Id. at 13.</p>
<p>Olson defined a collective good (also referred to as a common or public good) as one that, if consumed by anyone in a group, “cannot feasibly be withheld from the others in the group.” Id. at 14. Olson showed that the “larger a group is, the farther it will fall short of obtaining an optimal supply of any collective good, and the less likely that it will act to obtain even a minimal amount of such a good.” Id. at 36.2 Collective goods are more likely to be provided in small groups because it is more likely that some individual will conclude that his personal benefits exceed his personal costs, but even then, the amount of the public good will be sub-optimal, and “there is a systematic tendency for ‘exploitation’” by free riders. Id. at 29 (emphasis in original).3</p>
<p>A collective good may be provided if there is some quantity of it that “can be obtained at a cost sufficiently low in relation to its benefit that some one person in the relevant group would gain for providing that good all by himself.” Id. at 22. By definition, however, that person will not be able to prevent others from consuming the collective good. “Since an individual member thus gets only part of the benefit of any expenditure he makes to obtain more of the collective good, he will discontinue his purchase of the collective good before the optimal amount for the group as a whole has been obtained.” Id. at 35. And “the amounts of the collective good that a member of the group receives free from other members will further reduce his incentive to provide more of that good at his own expense.” Id. The result is sub-optimal levels of the collective good, and exploitation of anyone who provides it by those who benefit without paying—i.e., free riders. See id.</p>
<p>Olson showed how his analysis applies to unions, which provide collective goods. “A labor union works primarily to get higher wages, better working conditions, legislation favorable to workers, and the like; these things by their very nature ordinarily cannot be withheld from any particular worker in the group represented by the union.” Id. at 76. Moreover, union benefits that were already collective goods de facto were made so de jure when the “Wagner Act made collective bargaining a goal of public policy, and stipulated that whenever the majority of the employees in a bargaining unit voted for a particular union in a representation election, the employer must bargain collectively with that union about all the employees in that bargaining unit.” Id. at 79 (emphases in original).</p>
<p>Despite the benefits unions provided, however, they commonly suffered from lack of participation and financial support. See id. at 85. “Those opposed to unions could argue that this proves that the union shop forces men who do not agree with the policies of the union to remain in the organization, and is evidence that the workers do not really favor unions, much less compulsory membership.” Id. But that argument “stumbles over the fact that impartially conducted elections have shown again and again that unionized workers support union-shop provisions.” Id. In elections held under the Taft- Hartley Act, the proponents of which “apparently thought that workers would often throw off union- shop provisions in free elections,” unions instead “won all but four out of the 664 union-shop elections held” in the first four months after the Act passed, “with more than 90 percent of the employees voting for compulsory union membership. In the first four years, 44,795 union shops were authorized in such elections; 97 percent of the elections were won by the unions.” Id. As discussed below, union-recertification elections held in Iowa in October 2017 show similar results. See Section IV, infra.</p>
<p>The results of such elections may seem paradoxical. “Over 90 per cent will not attend meetings or participate in union affairs; yet over 90 per cent will vote to force themselves to belong to the union and make considerable dues payments to it.” Olson, supra, at 86 (emphasis in original). But there is no paradox. Voting for a union yet failing to support it with one’s own time and money is “a model of rationality,” because, although workers overwhelmingly believe they benefit from strong unions, each individual “will get the benefits of the union’s achievements” whether he contributes or not, “and will probably not by himself be able to add noticeably to those achievements.” Id. (emphasis in original).</p>
<p>Workers who vote for unions yet do not contribute to them are like citizens who vote for taxes yet “usually strive to contribute as little as the tax laws allow (and on occasion even less).” Id. at 87. Indeed, there “is no less infringement of ‘rights’ through taxation for the support of a police force or a judicial system than there is in a union shop. . . . To be consistent, those who base their case against the union shop solely on ‘right to work’ grounds must also advocate the ‘unanimous consent’ approach to taxation.” Id. at 88-89. But that approach is generally (and quite rightly) dismissed as absurd. “Collective bargaining, war, and the basic governmental services are alike in that the ‘benefits’ of all three go to everyone in the relevant group, whether or not he has supported the union, served in the military, or paid the taxes. Compulsion is involved in all three, and has to be,” because the “union member, like the individual taxpayer, has no incentive to sacrifice any more than he is forced to sacrifice,” id. at 90-91, even if “there is perfect consensus” about the value of the union, id. at 60 (emphasis in original).</p>
<p>&nbsp;</p>
<p><em>III. Theoretical and empirical studies of free riding after The Logic of Collective Action</em>: Like any seminal work—and “few books in economics have achieved the wide-ranging, lasting, and profound impact of The Logic of Collective Action”—Olson’s book “paved the way for new insights, applications, and the need for still further refinements.” Sandler, supra, at 1, 200. For example, research in behavioral economics helps refine Olson’s analysis by recognizing that individuals do not uniformly behave like the wealth maximizers generally assumed in economic theory.</p>
<p>Although “between 20 and 30 percent of the subjects” in experiments “behave completely selfishly,” others behave reciprocally—that is, they will cooperate if they believe others are doing the same, but will punish free riding, even if the costs of doing so are greater than a person motivated solely by profit would be willing to incur. Ernst Fehr &amp; Simon Gächter, Fairness and Retaliation: The Economics of Reciprocity, 14 J. Econ. Perspectives 159, 162 (2000). “The stability of reciprocal behavior suggests that it has deep evolutionary roots.” Id. at 163 n.2.</p>
<p>Reciprocal behavior can sustain cooperation, up to a point, despite free riding—which helps explain why unions in RTW jurisdictions do not disappear overnight.4 But if free riding cannot be prohibited, it is contagious. The “self-interested types choose to free ride because they are self-interested, and reciprocal types free ride because they observe others free riding.” Id. at 164. The end result, “in the absence of a punishment opportunity,” is that “average cooperation converges to very low levels in the later periods.” Id. at 165; see also, e.g., Dan M. Kahan, The Logic of Reciprocity: Trust, Collective Action, and Law, 102 Mich. L. Rev. 71, 79 (2003) (explaining the importance of “trust and reciprocity,” as opposed to mere wealth maximization, while observing that “some coercive mechanism remains necessary” to counteract free riding).</p>
<p>Theoretical and empirical research continues to confirm that “the existence of free-riding or noncooperative behavior should be considered not as an aberration but rather as something to be expected in groups with more than two members.” Molander, supra, at 768. Free riding has been observed and analyzed in all sorts of situations, by all sorts of economists—left, right, and center. Conservative economist Thomas Sowell, for example, explained that even if “everyone agrees that the benefits of mud flaps greatly exceed their costs, there is no feasible way of buying these benefits in a free market, since you receive no benefits from the mud flaps that you buy and put on your own car, but only from mud flaps that other people buy and put on their cars and trucks.” Sowell, supra, at 433-34. The solution is to pass laws “requiring all cars and trucks to have mud flaps on them.” Id. at 434.</p>
<p>Sowell also emphasized that the free-rider problem can emerge even when there is overwhelming agreement about the value of collective benefits. Consider national defense:</p>
<blockquote>
<p>Given the indivisibility of the benefits, even some citizens who fully appreciate the military dangers, and who consider the costs of meeting those dangers to be fully justified by the benefits, might still feel no need to spend their own money for military purposes, since their individual contribution would have no serious effect on their own individual security, which would depend primarily on how much others contributed. In such a situation, it is entirely possible to end up with inadequate military defense, even if everyone understands the cost of effective defense and considers the benefits to be worth it.</p>
</blockquote>
<p>Id. National defense is a prototypical example of the potential for free riding, but the phenomenon is ubiquitous, occurring not only in connection with union fees, but also church donations,5 deficits,6 NATO contributions,7 vaccinations,8 and in countless other contexts. See, e.g., Sandler, supra, at 95-192.</p>
<p>In sum, it is well established that free riding follows from individual economic self-interest in the context of collective goods, even when everyone agrees that they benefit from those goods. If individuals are not required to contribute, many who undisputedly benefit will nevertheless withhold their contributions out of simple self-interest, and others will withhold their contributions to avoid being taken advantage of by the free riders. A committed core may be able to sustain itself and provide some amount of the collective good, but even if some contributors persevere, the amount of the collective good will be sub-optimal, and will tend to decrease further and further below the optimum as the contagion of free riding spreads, resulting in increasing exploitation of the dwindling contributors.</p>
<p>&nbsp;</p>
<p><em>IV. Economic theory and empirical evidence refute the arguments of Petitioner and his amici regarding free riders</em>: Despite established economic theory and empirical evidence, Petitioner and his amici assert that eliminating fair-share fees will have little effect on union membership and collective bargaining, and will not increase free riding, but instead will merely liberate “forced riders.” See, e.g., Pet. Br. 51-53; Br. Amici Curiae Buckeye Inst. for Pub. Pol’y Sols. et al. (“Buckeye Br.”). Those assertions are incorrect.</p>
<p>The contention that overruling Abood and outlawing fair-share fees for public unions “is unlikely to cause a significant decline in union membership or spending,” Buckeye Br. 5, is both false and disingenuous.9 As the Congressional Research Service found, in a study on which the Buckeye Institute itself relies, “the union membership rate in union security states,” which allow fair-share fees, “is nearly three times that of RTW states,” which do not. Benjamin Collins, Cong. Research Serv., R42575, Right to Work Laws: Legislative Background and Empirical Research 7 (2014). Although some researchers have posited that “RTW laws reflect a state’s preexisting opposition to unions,” id. at 8, studies that control for “underlying attitudes about unionization” show that “RTW laws exert an independent and strongly negative effect on union” membership, Raymond Hogler et al., Right- to-Work Legislation, Social Capital, and Variations in State Union Density, 34 Rev. Regional Stud. 95, 96, 109 (2004).</p>
<p>RTW laws “reduce the ability of unions to organize workers and to develop workplace institutions conducive to collective bargaining.” Id. at 109. This is “not an artifact of underlying anti- union attitudes.” Id.; see also, e.g., Ozkan Eren &amp; Serkan Ozbeklik, What Do Right-to-Work Laws Do? Evidence from a Synthetic Control Method Analysis, 35 J. Pol’y Analysis &amp; Mgmt. 173, 193 (2016) (“Our results indicate that the passage of RTW laws in Oklahoma significantly decreased private sector unionization rates.”); Robert Bruno et al., The Economic Effects of Adopting a Right-to-Work Law: Implications for Illinois, 40 Lab. Stud. J. 319, 325 (2015) (“One area where there is a general consensus among researchers is on the negative effects that RTW laws have on union membership and union power.”). Anti-union sentiment is “not a compelling explanation” for the significant reduction in union organization and membership in RTW jurisdictions. Casey Ichniowski &amp; Jeffrey S. Zax, Right-to-Work Laws, Free Riders, and Unionization in the Local Public Sector, 9 J. Lab. Econ. 255, 273 (1991). Olson’s explanation remains the most compelling. “Free riders protected by right-to-work laws substantially reduce union membership and collective bargaining.” Id. at 273-74.</p>
<p>Furthermore, Petitioner’s contention that nonmembers who pay fair-share fees are “forced riders” is dramatically refuted by the results of recent recertification elections in Iowa. Under Iowa’s new collective-bargaining law, public-sector unions must be recertified every time they face a new contract negotiation—typically every two or three years. See Brianne Pfannenstiel, In biggest vote since new law, Iowa public unions overwhelmingly choose to recertify, Des Moines Reg., Oct. 25, 2017. They also must win approval from a majority of all employees covered by their collective-bargaining agreements; not just a majority of those who vote in the election. See id.; Iowa Code § 20.15(2)(b).</p>
<p>The election results for AFSCME Iowa Council 61 show that eighty-three percent of all employees covered by the union’s collective-bargaining agreements affirmatively voted to recertify the union. Only fifteen percent failed to vote. And only two percent voted against the union.10 Yet seventy- one percent of the employees are free riders, in the sense that they are covered by union agreements, but are not members of the union, and do not pay fair-share fees because Iowa is an RTW state. Thus, a mere twenty-nine percent of employees (the union members) pay all of the costs of collective bargaining that the vast majority of employees agree they benefit from, and affirmatively voted for, yet decline to contribute to because RTW laws allow employees to obtain those benefits without paying for them.</p>
<p>Even the two percent of employees who voted against the union and (presumably) do not contribute to it are “free riders whom the law requires the union to carry—indeed, requires the union to go out of its way to benefit, even at the expense of its other interests.” Lehnert v. Ferris Faculty Ass’n, 500 U.S. 507, 556 (1991) (Scalia, J., concurring in the judgment in part and dissenting in part) (emphases in original); see also id. at 562 (Kennedy, J., joining this part of Justice Scalia’s opinion). And of the remaining ninety-eight percent, those who accept union benefits without payment or objection are certainly free riders.11</p>
<p>Moreover, employees who are covered by collective-bargaining agreements but do not contribute to the union are free riders whom the law requires not only the union, but individual union members to subsidize. Legislatures are right to establish fair-share fees to offset what would otherwise be a forced subsidy from union members to nonmembers. The First Amendment does not preclude this “elimination of the inequity that would otherwise arise from mandated free-ridership.” Id. at 556 (Scalia, J., concurring in the judgment in part and dissenting in part).</p>
<p>&nbsp;</p>
<p><strong>CONCLUSION</strong>: Thus, the Court should not overturn Abood. Respectfully submitted,</p>
<p>DAN JACKSON <br />
Counsel of Record <br />
KEKER, VAN NEST &amp; PETERS, LLP 633 Battery Street <br />
San Francisco, CA 94111 <br />
(415) 391-5400 djackson@keker.com</p>
<p>Counsel for Amici Curiae</p>
<p>DATED: January 18, 2018</p>
<hr />
<p>1 The parties have filed blanket consents to the filing of amicus curiae briefs. No party or counsel for any party authored any part of this brief, nor funded its preparation or submission.</p>
<p>2 Olson provided a formal proof, but its details are omitted here. For discussion of those details, and more sophisticated mathematical models, see, e.g., Todd Sandler, Collective Action 19-94 (1992); and Per Molander, The Prevalence of Free Riding, 36 J. Conflict Resol. 756 (1992).</p>
<p>3 As Olson noted, the “moral overtones of the word ‘exploitation’ are unfortunate; no general moral conclusions can follow from a purely logical analysis. Since the word ‘exploitation’ is, however, commonly used to describe situations where there is a disproportion between the benefits and sacrifices of different people, it would be pedantic to use a different word here.” Olson, supra, at 29 n.47. The same is true of the term “free rider.” It may sound like a moral criticism, but it describes perfectly rational behavior. See, e.g., id. at 76-91.</p>
<p>4 Studies of reciprocal behavior also support the conclusion that fair-share fees help preserve labor peace, and serve employers’ interests, by obviating disruptive manifestations of the “powerful motives [that] drive the punishment of free riders.” Ernst Fehr &amp; Simon Gächter, Cooperation and Punishment in Public Goods Experiments, 90 Am. Econ. Rev. 980, 980 (2000).</p>
<p>5 See Brooks B. Hull et al., Free Riding, Market Structure, and Church Member Donations in South Carolina, 52 Rev. Religious Res. 172 (2010).</p>
<p>6 See Winfried Horstmann &amp; Friedrich Schnieder, Deficits, Bailouts and Free Riders: Fiscal Elements of a European Constitution, 47 KYKLOS 355 (1994).</p>
<p>7 See Sandler, supra, at 99-106.</p>
<p>8 See Yoko Ibuka et al., Free-Riding Behavior in Vaccination Decisions: An Experimental Study, 9 PLoS One 1 (2014).</p>
<p>9 Common sense and the statements of Petitioner’s own amici leave no doubt that Petitioner brought this case, and his amici support it, precisely because overruling Abood will decimate union membership and finances. As one of Petitioner’s amici told its supporters, if this Court overturns Abood, “millions” of public employees “will opt out” of paying dues or fees, with disastrous effects for public unions across the country. Freedom Foundation Fundraising Letter, Oct. 2017.</p>
<p>10 Note, moreover, that even those who voted against recertification do not necessarily oppose union representation; they may desire such representation, only by a different union.</p>
<p>11 The Buckeye Institute relies heavily on an article hypothesizing that the proportion of “true free riders” is closer to thirty percent. See Russel S. Sobel, Empirical Evidence on the Union Free-Rider Problem: Do Right-to-Work Laws Matter?, 16 J. Lab. Res. 347 (1995). But Sobel derives that percentage from a theoretical analysis “based on the assumption that the current covered nonmembers could costlessly switch to identical nonunion jobs.” Id. at 361 (emphasis added). Sobel estimates that seventy percent of nonmembers would switch to an identical nonunion job if they could do so costlessly and thereby avoid paying union dues. He calls these individuals “induced riders,” but they are simply free riders who are somewhat less attached to their union job than the other thirty percent. As Sobel makes clear, none of them are motivated by any ideological disagreement with the union. See id. at 353-55. They simply weigh their marginal economic benefits against their marginal costs, and conclude that if they can obtain identical benefits without paying union dues, they will. See id. at 353-55, 361. All of them are free riders in the classic sense.</p>
</div>
Economics 210b: Topics in Economic History: "Great Books" Coursetag:typepad.com,2003:post-6a00e551f08003883401bb09e8afe4970d2018-01-15T06:13:06-08:002018-01-15T06:13:06-08:00* 2018 on bCourses: * Brad DeLong's Office Hours: Th 10-12 Blum Hall 200G, and by appointment: send email to: Course Meeting: **Tuesday @ 4 PM in Evans Hall 639** ---- **Topics (Preliminary)**: * Jan 16: Organizational * Jan 23: Robert Allen: Global Economic History: A Very Short Introduction * Jan 30: Joel Mokyr: A Culture of Growth * Feb 6: Barry Eichengreen: Hall of Mirrors: The Great Depression, the Great Recession, and the Uses and Misuses of History * Feb 13: Robert Allen: The British Industrial Revolution in Global Perspective * Feb 20: Peter H. Lindert and Jeffrey G. Williamson: Unequal Gains: American Growth and Inequality since 1700 * Feb 27: Lawrence Katz and Claudia Goldin: The Race Between Education and Technology * Mar 6: Robert Gordon: The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War * Mar 13: Peter Temin: The Roman Market Economy * Mar 20: Sven Beckert: Empire of Cotton: A Global History * Apr 3: Ian Morris: Why the West Rules--for Now: The Patterns of History, and What They Reveal About the Future * Apr 10: Richard Baldwin: The Great Convergence: Information Technology and the New Globalization *...J. Bradford DeLong

AAAAIIIIYYYYEEEE!!!!: Monday Smackdown—BitCoin Editiontag:typepad.com,2003:post-6a00e551f08003883401b8d2c881a7970c2018-01-08T18:10:18-08:002018-01-13T06:26:47-08:00Some people wish me ill. They keep emailing me things from John Cochrane. I wish they wouldn't. Or I wish I would develop some self-control. This is not making me happy: First, let me set forth an intelligent, rational, measured assessment of BitCoin, made by somebody who was never a tenured finance economist at the University of Chicago: **Glenn Loury 2.0**: @justabloodygame on Twitter: "Seriously, I read stories about people mortgaging their homes to buy Bitcoin and I want to rip my hair out..." We can then compare this with the [irrational word salad of John Cochrane](https://johnhcochrane.blogspot.com/2017/11/bitcoin-and-bubbles.html). To the extent that there is an argument, it goes like this: 1. BitCoin is not a "bubble". It is not a mania of irrational crowds. It is, rather, "a fairly pure instance of a regularly occurring phenomenon in financial markets.... What's going on with Bitcoin... [is] a perfectly 'normal' phenomenon.... Such price surges only happen with restricted supply, and accompany price volatility, large trading volume, and short holding periods... [rather than the] madness of crowds..." 2. At and after some future moment BitCoin will be worthless. 3. But before that moment there will be a peak fundamental demand for BitCoin for money...J. Bradford DeLong

Some people wish me ill. They keep emailing me things from John Cochrane. I wish they wouldn't. Or I wish I would develop some self-control. This is not making me happy:

First, let me set forth an intelligent, rational, measured assessment of BitCoin, made by somebody who was never a tenured finance economist at the University of Chicago:

Glenn Loury 2.0: @justabloodygame on Twitter: "Seriously, I read stories about people mortgaging their homes to buy Bitcoin and I want to rip my hair out..."

BitCoin is not a "bubble". It is not a mania of irrational crowds. It is, rather, "a fairly pure instance of a regularly occurring phenomenon in financial markets.... What's going on with Bitcoin... [is] a perfectly 'normal' phenomenon.... Such price surges only happen with restricted supply, and accompany price volatility, large trading volume, and short holding periods... [rather than the] madness of crowds..."

At and after some future moment BitCoin will be worthless.

But before that moment there will be a peak fundamental demand for BitCoin for money laundering and ransom payment.

At that moment of peak fundamental demand, the value of BitCoin will be high—after all, you cannot short it.

Before that moment, there is money to be made by going long, whenever you have private information that future peak fundamental demand will be higher than the market expects.

This information arrives lumpily and sporadically.

Hence before that moment the market equilibrium price will be volatile—both up and down.

But this is not a bubble. This is a rational market. Everybody who buys BitCoin rationally profits ex ante:

Those who need BitCoin at that moment of peak fundamental demand profit by laundering money or obtaining the release of loved ones.

Those who speculate before that moment earn a competitive expected return for their capital, research sweat, and risk-bearing.

This is just a normal efficient financial market assessing lumpy and sporadic information about future peak fundamental demand for money laundering and ransom payment.

There are large returns—both positive and negative—ex post. But that's just volatility for you.

If you believe that message, Cochrane—if you believe that lumpy arrive of information about future peak fundamental demand for money laundering and ransom payment is the explanation for the gyrations of BitCoin—I have a Nigerian prince on the line who has a unique source of tulip bulbs infected with the tobacco mosaic virus. And would you like to see some bonds from the Kingdom of Poyais?

What we have to understand is not that BitCoin has a potential convenience yield for money launderers and ransom payers—and hence a positive price. What we have to understand is the magnitude and fluctuations of that positive price. What we have to understand is that the price is 10 times what it was at the start of 2017. What we have to understand is that there appear to be 1000 people in the Bay Area holding half the BitCoins in the world, with an average investment of 150 million each.

...It strikes me as a fairly pure instance of a regularly occurring phenomenon in financial markets, one that encompasses some "excess valuations" in stock markets, gold and commodities, and money itself.

Let's put the pieces together. The first equation of asset pricing is that price = expected present value of dividends. Bitcoin has no cash dividends, and never will. So right off the bat we have a problem—and a case that suggests how other assets might have value above and beyond their cash dividends.

Well, if the price is greater than zero, either people see some "dividend," some value in holding the asset, beyond its cash payments; equivalently they are willing to hold the asset despite a lower expected return going forward, or they think the price will keep going up forever, so that price appreciation alone provides a competitive return. The first two are called "convenience yield," the latter is a "rational bubble."

"Rational bubbles" are intriguing, but I think fundamentally flawed. If a price goes up forever, eventually the value of bitcoin must exceed all of US wealth, then all of world wealth, then all of interplanetary wealth, then all of the atoms in the universe. The "greater fool" or Ponzi scheme theory must break down at some point, or rely on an irrational belief in the next fool. The rational bubbles theory also does not account for the association of price surges with high volatility and high trading volume.

So, let's think about "convenience yield." Why might someone be willing to hold bitcoins even though their price is above "fundamental value"—equivalently even though their expected return over a decently long horizon is lower than that of stocks and bonds? Even though we know pretty much for sure that within our lifetimes bitcoin will become worthless? (If you're not sure on that, more later)

Well, dollar bills have the same feature. They don't pay interest, and they don't pay dividends. By holding dollar bills, you are holding an asset whose fundamental value is zero, and whose expected return is demonstrably lower than that of, say, one-year treasuries. One year Treasuries are completely risk free, and over a year will give you about 1.5% more than holding dollar bills. This is a pure arbitrage opportunity, which isn't supposed to happen in financial markets!

It's pretty clear why you still hold some dollar bills, or their equivalent in non-interest-bearing accounts. They are more convenient when you want to buy things. Dollar bills have an obvious "convenience yield" that makes up for the 1.5% loss in financial rate of return.

Also, nobody holds dollar bills for a whole year. You minimize the use of dollar bills by going to fill up at the ATM occasionally. And the higher interest rates are, the less cash you hold and the more frequently you go to the ATM. So, already we have an "overpricing"—dollars are 1.5% higher priced than treasurys—that is related to "short-term investors" and lots of trading—high turnover, with more overpricing when there is more trading and higher turnover—just like bitcoin. And 1999 tech stocks. And tulip bubbles.

Some of the convenience yield of cash is that it facilitates tax evasion, and allows for illegal voluntary transactions such as drugs and bribes. We can debate if that's good or bad. Lots of economists want to ban cash (and bitcoin) to allow the government more leverage. I'm less enthusiastic about suddenly putting out of work 11 million undocumented immigrants and about half of small businesses. The US tends to pass a lot of aspirational laws that if enforced would bring the economy to a halt. To say nothing of the civil liberties implications if the government can track every cent everyone has ever spent.

But US cash is largely stuffed in Russian mattresses. It is even less obvious that it is in our interest to enforce Russian laws on taxation or Russian control over transactions. Or Chinese, Venezuelan, Cuban, etc. control.

And more so bitcoin. This is the obvious "convenience yield" of bitcoin—the obvious reason some people are willing to hold bitcoin for some amount of time, even though they may know it's a terrible long-term investment. It certainly facilitates ransomware. It's great for laundering money. And it's great for avoiding capital controls—getting money out of China, say. As with dollars there is a lot of bad in that, and a lot of good as well. (See Tyler Cowen on some parallel benefits of offshore investing.)

But good or bad is beside the point here. The point here is that there is a perfectly rational demand for bitcoin as it is an excellent way to avoid both the beneficial and destructive attempts of governments to control economic activity and to grab wealth—even if people holding it know that it's a terrible long-term investment.

On top of this "fundamental" demand, we can add a "speculative" demand. Suppose you know or you think you know that bitcoin will go up some more before its inevitable crash. In order to speculate on bitcoin, you have to buy some bitcoin. I don't know if you can short bitcoin, but if you wanted to you would have to borrow some bitcoin and sell it, and in the process you would have to hold some bitcoin. So, as we also see in high-priced stocks, houses and tulips, high prices come with volatile prices (so there is money to be made on speculation), and large trading volumes. Someone speculating on bitcoin over a week cares little about its fundamental value. Even if you told him or her that bitcoin would crash to zero for sure in three years, that would make essentially no dent in their trading profits, as you can make so much money in a volatile market over a week, if you get on the right side of volatility.

Now to support a high price, you need restricted supply as well as demand. There are only so many bitcoins, as there are only so many gold bars, at least for now. But that will change. The Achilles' heel of bitcoin's long term value is that there is nothing to stop people from creating bitcoin substitutes—there are already hundreds of other similar competitors. And there is nothing to stop people from creating private claims to bitcoin—bitcoin futures—to satisfy speculative demand. But all that takes time. And none of my demands were from people who want to hold bitcoin for very long. Ice cream is also a fast-depreciating asset, but people hold it for a while. In this view, however, Bitcoin remains a terrible buy-and-hold asset, especially for an investor who plans to pay taxes.

In sum, what's going on with Bitcoin seems to me like a perfectly "normal" phenomenon. Intersect a convenience yield and speculative demand with a temporarily limited supply, plus temporarily limited supply of substitutes, and limits on short-selling, and you get a price surge. It helps if there is a lot of asymmetric information or opinion to spur trading, and given the shady source of bitcoin demand—no annual reports on how much the Russian mafia wants to move offshore next week—that's plausible too.

This view says that price surges only happen with restricted supply, and accompany price volatility, large trading volume, and short holding periods. That's a nice testable link, which seems to hold for bitcoin. And other theories, such as madness of crowds, no not explain that correlation...

Determining Bargaining Power in the Platform Economy: Reinvent Full Transcripttag:typepad.com,2003:post-6a00e551f08003883401bb09e55aeb970d2018-01-03T20:00:05-08:002018-01-03T20:17:41-08:00**Reinvent**: [Determining Bargaining Power in the Platform Economy](http://reinvent.net/events/event/determining-bargaining-power-in-the-platform-economy/): Our political system has been hacked by time, circumstance, chaos, and disaster... ...The failings of the electoral college, the fact that small states hacked the constitution in 1787, so we now have a world in which the minority in the Senate represents 175 million people, while the majority represents 145 million people, and the gerrymandering after the 2010 census are primary examples of this dysfunction. Fixes for the economy?: * A 4 percent inflation target from the Federal Reserve, * Incentivizing businesses to invest in workers, * Reinvigorating the idea that technology should be used to augment workers, not replace them. The possibilities for positive human flourishing from the platform economy are immense, provided the platforms actually work. Uber’s investors are currently paying 40 percent of Uber’s costs. What happens when these investors start wanting their money back? The platform economy moves bargaining power away from the service providers and from the customers, and into the hands of the platforms. This is a problem for both consumers and independent workers. What bargaining power workers will have will be correlated to the time and resources devoted to training them: when you walk, you...J. Bradford DeLong

...The failings of the electoral college, the fact that small states hacked the constitution in 1787, so we now have a world in which the minority in the Senate represents 175 million people, while the majority represents 145 million people, and the gerrymandering after the 2010 census are primary examples of this dysfunction.

Fixes for the economy?:

A 4 percent inflation target from the Federal Reserve,

Incentivizing businesses to invest in workers,

Reinvigorating the idea that technology should be used to augment workers, not replace them.

The possibilities for positive human flourishing from the platform economy are immense, provided the platforms actually work. Uber’s investors are currently paying 40 percent of Uber’s costs. What happens when these investors start wanting their money back? The platform economy moves bargaining power away from the service providers and from the customers, and into the hands of the platforms. This is a problem for both consumers and independent workers. What bargaining power workers will have will be correlated to the time and resources devoted to training them: when you walk, you disrupt a general production value chain, and it is expensive to figure out how to replace you, even if there’s someone else who certainly could do the job just as well. But if it is not very expensive, you have little power.

Nevertheless, here in California it is hard not to be a techno-optimist—especially if you are an curious infovore...says...

Full Transcript:

Pete Leyden: Hello. I'm Pete Leyden. Today, we have Brad DeLong with us. He is an economics professor here at U.C. Berkeley. He's also the recently installed chief economist of the Blum Center for Developing Economy.

Pete Leyden: It's good to have you here.

Brad DeLong: Great to be here.

Pete Leyden: We’re here at this moment with all these folks from the OECD, the economists from the United States here, and the technologists. If you had to think about the kind of moment we're in right now, how would you characterize where we are as far as the evolution of the global economy and our technologies are? Is there anything special about this moment? Anything critical about it? Any ways you think about this juncture?

Brad DeLong: Let me give you a three-part answer to that: a 50-year horizon answer, a 15-year horizon answer, and then a 0-5-year horizon answer.

Brad DeLong: The 0-5-year horizon answer is: America has been deeply scarred by the financial crisis that started in 2007, the deep recession that followed, and the extraordinarily anemic recovery since. That still leaves us with four million people fewer in the labor force and looking for jobs than we ought to have. We are not sure what all of them are doing. Many are living in their sisters' basements playing video games. The economy and people's expectations of how it works have been shocked. How well our society functions is still deeply scarred. We are recovering only slowly, if at all, back to what we used to think was normal. that is the 0-5-year horizon answer.

Brad DeLong: The 50-year horizon answer is: Expect the collapse of the need for people to do a great many tasks that people used to do and are still doing that provide value. In the next 50 years an awful lot of paper-shuffling tasks are going to be taken over by software bots. An awful lot of blue-caller, traditionally male, tasks are going to be taken over by robots. Few occupations will disappear. But many occupations will be transformed. And many will shrink. The income and wealth distribution will be upset—either in a positive or a negative direction. These 50-year horizon processes are what most of us upstairs at this conference are worrying about.

Brad DeLong: Then there's a 10- to 15-year horizon. How much of this transformation is going to happen in the next 15 years, as opposed to the rest of the next 50? How fast is the 50-year horizon process going to come upon us? Where exactly will be the first sectors and first places in which the coming of—call it the “Rise of the Machines”—the replacement not just of blue-color manufacturing but also construction and transportation and distribution and warehouse workers will be hit by technology, and who? Where and when will a good deal of standard white-color paper-shuffling work start to disappear as expert systems and software bots take it over?

Pete Leyden: In your career, is this about as momentous a time as you've seen? Or is that overhyping it?

Brad DeLong: That we are recovering from the macroeconomic catastrophe that started in 2007 has definitely made it very, very fraught. The failure of our Electoral College to deliver us a competent president in 2016 has definitely made it very, very fraught. Our political system was hacked partially by malevolent people, but mostly by time, circumstance, chaos, and disaster. It has been hacked in three ways.

Brad DeLong: The first way it has been hacked is the Electoral College failure; that gave us a president who really is not up to the job in practically any dimension. The second way is that small states hacked the constitution in 1787, so today the 49-seat minority in the senate represents 175 million people, while the 51-seat majority represents 145 million people. The desperately minority congressional government understands it is a minority government. It is acting oddly as a result. Third, the state-level Republican gerrymandering after the 2010 censushas given us House of Representatives is extraordinarily unrepresentative of the median American voter. These have created a time of great political fraughtness. We clearly have a very badly broken political system. That greatly deepens and increased the dangers of managing what I call the 50-year transition. And on top of that is the economic fraughtness left from 2007.

Brad DeLong: The 50-year transition has been going on since Steve Jobs and Steve Wozniak began building personal computers in the garage. It has been going on at a more less constant pace. We see a little bit more about where it's heading with each passing year. It really has not sped up much. What has made this moment fraught is the political disaster of 2016 and the echoing effects of the economic disaster of 2007.

Pete Leyden: There are three challenges we've been wrestling with here. You mentioned one of them—the robots and AI. But there's this idea that the economy is moving towards more and more independent workers. There's also this rise of the "platform economy". How do you think of those other two challenges? How important developments are they? How much do they concern you—or actually encourage you as good thing?

Brad DeLong: The platform economy has a number of dimensions. One is what Hal Varian was talking about at the conference yesterday—the "end of the need for scale". With Amazon Web Services and with Google anyone with a good idea can launch their website at scale for pennies, providing through the web whatever service or commodity they want to provide. And if demand is there they can scale up as far as they need to using very cheap world class-efficiency systems to support their businesses. You no longer need a large initial lump of capital of any. You just soft launch and look for demand. You use the web and search to attract customers. You use AWS and Google to provide your back end. This should be the cause of an enormous upward surge in entrepreneurship and enterprise, and a great flourishing of creativity. Whether it's individuals with an extra four hours a week making extra money by driving for Lyft, or whether it's writers saying, “I don't want to have to sell books at 20 bucks and get only a \$1.50 in royalties. I want to establish my own Patreon and have my fans pay me directly”, or any of a whole bunch of other things.

Brad DeLong: The possibilities for positive human flourishing from the platform economy are immense—if the platforms actually work. Right now we find ourselves in a world in which riders are paying essentially 60% of Uber's costs. Uber's investors are paying 40% of Uber's costs. What happens when the investors begin wanting their money back? Do we find that Uber has enough economies of scale, and scope, and enough of a brand and a first mover advantage, that it’s a profitable business? Or do we find that the business gets taken over by somebody else? What if Google puts a little taxi ride button on every Google Map screen, saying: “We'll only charge you a \$1.50 as a handling fee”? Uber will have charge you considerably more if it wants to repay its investors. Uber may turn out to have done the trail-breaking thing. Uber may suffer the fate of most pioneers—arrows in their back, and face down. Or perhaps the platform economy will not be a good thing. Perhaps it moves bargaining power away from the real producers, who are doing the work, and also away from the customers, and into the hands of that one large company in the middle that controls the information. That’s still up for grabs.

Brad DeLong: Most people who fear that we are, as the extremely sharp Zeyneb Tufekci of Duke University says, “building a dystopia one brick at a time in order to trigger people to click on ads", greatly fear that individual humans, given our cognitive disabilities, will be no match for the informational middleman organization using deep learning and information to figure out how to trigger and control us. Others are much more optimistic—although not necessarily much more optimistic about the prospects of individual platform pioneers like Uber. They are, however, more optimistic about the prospects of the large companies that have entrenched dominant positions: companies like Apple, Google, and Facebook—not that they are optimistic about any one of them, but rather they are optimistic about the prospects for profits for all of them put together, because what opportunities one of them fumbles another one is likely to recover.

Pete Leyden: They will do well for everybody, or do good for themselves?

Brad DeLong: They will well, and they will do good.

Pete Leyden: Do good. And where do you find that, actually?

Brad DeLong: I’m basically a techno-optimist. It's hard not to be a techno-optimist in California—especially if you're an intellectual, a data loving infovore.

Pete Leyden: You think even though there are all these challenges, the platform economy is something we could get behind?

Brad DeLong: Yes.

Pete Leyden: What about speaking as an economist now? This other thread: independent workers playing an increasing role in the economy. There’s a positive way to see that. There are also challenges in that. I'm curious to how you see that challenge.

Brad DeLong: Independent workers have, by their nature, very little bargaining power over what economists call “rents embedded in the system”. Your bargaining power is limited by what you could charge if you walked away from the relationship and went out on your own, and by what your counterparty would have to pay in order to get someone else to step up in your place. You have bargaining power if, when you walk, you disrupt a complex and valuable general production value chain, and your counterparts finds it expensive to figure out how to replace you. You have bargaining power even if there is someone else who could fill your job just as well if and only if it is difficult to find that person. A lot of successful middle-class societies have been based on situations in which relatively low-skill workers have bargaining power and share big time in economic rents, either because there aren't that many replacements in the area or because they threaten to walk as a group.

Brad DeLong: Yesterday at the conference, ex-governor Jennifer Granholm of Michigan told a heartbreaking story about a town in central Michigan: 8,000 people, of whom 3,000 worked in the refrigerator plant. Those 3,000 workers made a very good living for Michigan at the start of the 2000s—some 35 buck an hour, I think, in wages and benefits. But the refrigerator plant goes. And after it leaves they are lucky to make \$12 or \$15 an hour. And then all those who worked to satisfy their demands find their markets have halved in value. The refrigerator plant workers' skills, machines, lifetime of experience bashing metal and operating things that form refrigerator coils—there's really not much demand for those skills in central Michigan, and they find that they can't transfer their skills to do anything else of great value. The principal source of their income was sharing in the rents created by the refrigeration value chain: their dominant market positions and imbedded technology. That kind of danger faces a lot of people who become independent workers. And the middleman firm does not have to close. All the middleman firm has to do is say: "I am altering the deal. Pray I do not alter it any further".

Brad DeLong: On the other hand, an independent worker economy is not bound to be destructive. As long as we have a middle-class society, these are immense amounts of work to be done for one another. And replacing any of us with somebody else will be expensive. Think of the typical job in the economy going from being a manufacturing worker to being a barista at a coffee shop or a teacher at a yoga studio. As long as you have a middle-class society, there'll be a lot of people who will be willing to pay handsomely for yoga lessons or for a particular espresso beverage brewed exactly the way they like it with a smile, a handshake, and a friendly three-minute conversation about how they’re doing, while the thing brews.

Brad DeLong: On the other hand, if we have plutocracy, in which the only people who have a lot of money are the rich, then the potential customers for the yoga studio won't be able to pay very much and your fancy expresso drink won't command very much. The only people who’ll have middle-class lives will be those who control resources that are useful for making things for which rich people have a serious Jones. There’ll be relatively few of those as well. Thus most of it is the shape of what the income distribution will be. That is ultimately a political choice about the distribution of wealth. An unequal distribution of wealth will drive an unequal distribution of income. That will then reproduce itself. And an equal distribution of wealth will drive a more equal distribution of income, which will also reproduce itself.

Pete Leyden: You’ve kind of given—this is probably right that could go this way, could go that way, could be positive, could be negative—I get that and that's good choices here but...

Brad DeLong: ...This is why we economists want not to have just two hands, but a prehensile tail as well...

Pete Leyden: But in that respect, what do you see is the most promising ways forward to kind of deal with this juncture we're in—tip the balance? What are the things that you'd like to see happen soon here that would evolve this economy in the direction to make it healthy?

Brad DeLong: Am I allowed to say a 4% inflation target from the Federal Reserve? A Federal Reserve that is less focused on keeping inflation very low, more focused on keeping employment high, and more focused on making sure that there's enough inflation in the system that the Federal Reserve can maintain interest rates at a level at which it will have the power to stabilize the economy? Businesses are not going to want to train their workers unless workers are scarce. Workers tend to be scarce only in what we call a “high-pressure economy.” The first and most important thing would be to change the calculations of those businesses that might be willing to invest in training workers. They need to feel that workers are valuable commodities under their control that they need to boost the value of. It has been totally the case since 2008, and largely the case since 2001, that businesses think there are plenty of workers out there, and we really don't care about them, because the bottlenecks keeping us from being more profitable are elsewhere. Making labor a serious bottleneck for business so that business focuses on helping workers become more productive and more useful is, I think, the first thing we could do.

Brad DeLong: The second thing would be to repeat what Silicone Valley did in the 1980s and 1990s, that is you’re old enough to remember the coming of the Macintosh computer in 1984...

Pete Leyden: ...Indeed...

Brad DeLong: ...Apple bought Super Bowl time for a dystopian 1984 TV commercial. It was all about how important the Macintosh computer would be as an engine of freedom. They really believed that the personal computer was an engine of freedom. It allowed you to control and access your own information, rather than having to rely on some human resource or IT department backed by some large mainframe that had lots of data that you weren't allowed to access and controlled your life. The fear back then was that people would become information serfs: the valuable parts of the enterprise and the value chain would be kept under lock-and-key in the hands of the priests of IT and HR. It was a world in which people would take their draft cards and burn them, in which your information would come on five IBM cards which would all say, “Do not fold, spindle, or mutilate", and which you would feed into the machine face down, nine-edge first. The vibe was that those cards produced decisions over which you had no control or knowledge. Thus making information technology tools to augment people's abilities to figure out and maneuver in the world that they were in, rather than information technology being a tool for supervision and control—“you're 15% less productive at processing claims, so we don't need you around anymore, and you have no skills or information that can be transferred elsewhere.”

Brad DeLong: The idea of Apple Macintosh 1984 was of information technology as a way of augmenting human intelligence and boosting productivity—rather than information technology as a way that we can substitute capital for labor, and getting these annoying workers out of the factory or office while still producing as much. That was a key and a revolutionary social goal of Silicon Valley as it existed in the 1980s and 1990s, from the coming of the personal computer to the flourishing of the internet. In some sense, Silicon Valley has to figure out how to do this again. Organizations like, say, Berkeley's engineering school have to help. Large companies tend to be much more interested in figuring out how to use information technology to shed annoying and expensive workers, rather than how to give those annoying and expensive workers more control over their lives.

Pete Leyden: Well, that's fascinating. It's a big challenge to the tech world as well as a challenge to policy makers. I wish we had more time to kind of go deeper into many, many possible solutions there. But just to wind up here, big challenges, possible big solutions shift, how confident are you that we're going to manage this transition here? Whether it's the five-year, the 15-year transition, how confident are you going to do it and how worried are you?

Brad DeLong: I would say I'm not confident at all.I would say that our income and wealth distribution now has managed to tilt itself in a bad way. If you want the economy to pay attention to you, you better have money. And the money is too concentrated now. If you want the polity to pay attention to you, you better have a movement. Yet somehow it seems that the age of the internet and of the decline of manufacturing has made it harder rather than easier to create durable social movements. At the same time it has made it much easier to create the appearance of a social movement via software bots controlled by some server in the Former Yugoslav Republic of Macedonia. And that crowds the information flow. What is the cartoon? "1980: my incandescent light bulb produces ten times as much heat as light. 2017: my LED light bulb has been taken over and is now running a button out of 50,000 Twitter followers controlled via a server on another continent." That that seems to be the world we're moving into. It's not terribly a reassuring one.

Pete Leyden: Well, that's a good place to end. At least that’s a sobering thought, and thanks so much for joining us here and giving us your thoughts.

Brad DeLong: You're very welcome. It's a great pleasure. Bring me back again.

Pete Leyden: I will.

Why Low Inflation Is No Surprise: Fresh at Project Syndicatetag:typepad.com,2003:post-6a00e551f08003883401b8d2cc4445970c2018-01-03T05:10:05-08:002018-01-03T05:21:14-08:00**[Project Syndicate](https://www.project-syndicate.org/)**: [Why Low Inflation Is No Surprise by J. Bradford DeLong](https://www.project-syndicate.org/commentary/low-inflation-no-surprise-by-j--bradford-delong-2018-01): BERKELEY – The fact that inflation has remained stubbornly low across the global North has come as a surprise to many economic observers. In September, the always sharp and thoughtful Nouriel Roubini of New York University attributed this trend to positive shocks to aggregate supply.... In my view, interpreting today’s low inflation as a symptom of temporary supply-side shocks will most likely prove to be a mistake. This diagnosis seems to misread the historical evidence from the period between the early 1970s and the late 1990s... [Read MOAR at Project Syndicate](https://www.project-syndicate.org/commentary/low-inflation-no-surprise-by-j--bradford-delong-2018-01)J. Bradford DeLong

Project Syndicate: Why Low Inflation Is No Surprise by J. Bradford DeLong: BERKELEY – The fact that inflation has remained stubbornly low across the global North has come as a surprise to many economic observers. In September, the always sharp and thoughtful Nouriel Roubini of New York University attributed this trend to positive shocks to aggregate supply.... In my view, interpreting today’s low inflation as a symptom of temporary supply-side shocks will most likely prove to be a mistake. This diagnosis seems to misread the historical evidence from the period between the early 1970s and the late 1990s... Read MOAR at Project Syndicate

Procrastination for December 28, 2017tag:typepad.com,2003:post-6a00e551f08003883401b8d2cabe58970c2017-12-28T09:43:54-08:002017-12-28T09:43:54-08:00Yes, this feature was dropped on the floor during chaotic December. Why do you ask? But it is now time to pick up the slack: ---- **Worth Highlighting at Grasping Reality**: * [Six Tax "Reform"-Related Appeals to Various People to Do Their Jobs for Their Country's Sake—and Even, in the Long Run, Their Selves' Sake](http://www.bradford-delong.com/2017/12/six-tax-reform-related-appeals-to-various-people-to-do-their-jobs-for-their-countrys-sakeand-even-in-the-long-run-th.html) * [Tax Foundation Score of the Tax "Reform" Conference Report](http://www.bradford-delong.com/2017/12/tax-foundation-score-of-the-tax-reform-conference-report.html) * [Deer in the Headlights?](http://www.bradford-delong.com/2017/12/deer-in-the-headlights.html) * [An Appeal to the Republican-Supporting Plutocrats of America](http://www.bradford-delong.com/2017/12/an-appeal-to-the-republican-supporting-plutocrats-of-america.html) * [An Appeal to the Republican-Leaning Entrepreneurial, Enterprising, and Lucky White Christian Upper Middle Class of America](http://www.bradford-delong.com/2017/12/an-appeal-to-the-republican-leaning-entrepreneurial-enterprising-and-lucky-white-christian-upper-middle-class-of-america.html) * [An Appeal to the Kansas Congressional Delegation: Jerry Moran, Pat Roberts, Roger Marshall, Lynn Jenkins, Kevin Yoder, and Ron Estes](http://www.bradford-delong.com/2017/12/an-appeal-to-the-kansas-congressional-delegation-jerry-moran-pat-roberts-roger-marshall-lynn-jenkins-kevin-yoder-and-ro.html) * [Robert Barro here is neither "serious" nor "careful".](http://www.bradford-delong.com/2017/12/must-read-ahem-if-robert-barro-seriously-and-carefully-thought-the-long-run-boost-to-national-income-from-the-tax-refo.html#more) He is, instead, delivering a piece that nails the 0.3% per year growth boost that the Republican political spinmasters have settled on as the talking point... * [Hoisted from the Archives: Night Thoughts on Dynamic Scoring](http://www.bradford-delong.com/2017/12/hoisted-from-the-archives-night-thoughts-on-dynamic-scoring.html) * [Monday Smackdown: Treasury Document Translation: Steve Mnuchin Is Not a Professional Treasury Secretary. He and His Personal Staff Are Grifters](http://www.bradford-delong.com/2017/12/monday-smackdown-treasury-document-translation-steve-mnuchin-is-not-a-professional-treasury-secretary-he-and-his-personal.html) * [Do Not Expect too Much from Individual Senators](http://www.bradford-delong.com/2017/12/do-not-expect-too-much-from-individual-senators.html) * [How to Be an Unprofessional Republican Economist...J. Bradford DeLong
<div xmlns="http://www.w3.org/1999/xhtml"><p><img style="display:block; margin-left:auto; margin-right:auto;" src="http://delong.typepad.com/.a/6a00e551f08003883401b8d2c9d223970c-pi" alt="Reinvent" title="Reinvent.png" border="0" width="750" height="188" /></p>
<p>Yes, this feature was dropped on the floor during chaotic December. Why do you ask?</p>
<p>But it is now time to pick up the slack:</p>
<hr />
<p><strong>Worth Highlighting at Grasping Reality</strong>:</p>
<ul>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/six-tax-reform-related-appeals-to-various-people-to-do-their-jobs-for-their-countrys-sakeand-even-in-the-long-run-th.html">Six Tax "Reform"-Related Appeals to Various People to Do Their Jobs for Their Country's Sake—and Even, in the Long Run, Their Selves' Sake</a></span>
<ul>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/tax-foundation-score-of-the-tax-reform-conference-report.html">Tax Foundation Score of the Tax "Reform" Conference Report</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/deer-in-the-headlights.html">Deer in the Headlights?</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/an-appeal-to-the-republican-supporting-plutocrats-of-america.html">An Appeal to the Republican-Supporting Plutocrats of America</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/an-appeal-to-the-republican-leaning-entrepreneurial-enterprising-and-lucky-white-christian-upper-middle-class-of-america.html">An Appeal to the Republican-Leaning Entrepreneurial, Enterprising, and Lucky White Christian Upper Middle Class of America</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/an-appeal-to-the-kansas-congressional-delegation-jerry-moran-pat-roberts-roger-marshall-lynn-jenkins-kevin-yoder-and-ro.html">An Appeal to the Kansas Congressional Delegation: Jerry Moran, Pat Roberts, Roger Marshall, Lynn Jenkins, Kevin Yoder, and Ron Estes</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/must-read-ahem-if-robert-barro-seriously-and-carefully-thought-the-long-run-boost-to-national-income-from-the-tax-refo.html#more">Robert Barro here is neither "serious" nor "careful".</a></span> He is, instead, delivering a piece that nails the 0.3% per year growth boost that the Republican political spinmasters have settled on as the talking point...</li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/hoisted-from-the-archives-night-thoughts-on-dynamic-scoring.html">Hoisted from the Archives: Night Thoughts on Dynamic Scoring</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/monday-smackdown-treasury-document-translation-steve-mnuchin-is-not-a-professional-treasury-secretary-he-and-his-personal.html">Monday Smackdown: Treasury Document Translation: Steve Mnuchin Is Not a Professional Treasury Secretary. He and His Personal Staff Are Grifters</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/do-not-expect-too-much-from-individual-senators.html">Do Not Expect too Much from Individual Senators</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/how-to-be-an-unprofessional-republican-economist-in-four-easy-steps.html">How to Be an Unprofessional Republican Economist in Four Easy Steps...</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/dan-alpert-et-al-sales-factor-apportionment-and-international-taxation.html">Dan Alpert, et al: Sales Factor Apportionment and International Taxation</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/early-monday-smackdown-tax-reform-intellectual-garbage-cleanup-edition.html">(Early) Monday Smackdown: Tax Reform Intellectual Garbage Cleanup Edition</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/eleven-california-republican-house-members-voting-to-make-their-districts-and-constituents-poorer.html">Eleven California Republican House Members Voting to Make Their Districts and Constituents Poorer</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/how-many-of-11-california-republicans-in-the-house-can-we-flip-to-no-on-tax-reform.html">How Many of 11 California Republicans in the House Can We Flip to "NO!" on Tax "Reform"?</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/monday-smackdown-nine-republican-economists-being-unprofessional-on-tax-reform-edition.html">Monday Smackdown: Nine Republican Economists Being Unprofessional on Tax Reform Edition</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/greg-mankiw-sigh-the-inestimable-value-of-the-samuelsonian-triad.html">Greg Mankiw... Sigh: The Inestimable Value of the Samuelsonian Triad</a></span>
<ul>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/comment-of-the-day-but-alas-i-think-robert-waldmann-has-the-completely-wrong-draw-the-graph-robert-what-areas-on-wh.html#more">Draw the Graph, Robert!</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/economics-as-a-professional-vocation.html">Economics as a Professional Vocation</a></span></li>
</ul></li>
</ul></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/united-states-broken-political-system-no-longer-fresh.html">The Broken Political System of the United States</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/reinvent-determining-bargaining-power-in-the-platform-economy.html">Reinvent: Determining Bargaining Power in the Platform Economy</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/three-books.html">Three Books for 2017: Economics for the Common Good, Janesville, Economism</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/karl-polanyi-classical-liberalism-and-the-varieties-of-neoliberalism-hoisted-from-the-archives.html">Karl Polanyi, Classical Liberalism, and the Varieties of "Neoliberalism": Hoisted from the Archives</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/notes-on-gerald-friedman.html">Notes on Gerald Friedman</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/the-great-depression-from-the-perspective-of-today-and-today-from-the-perspective-of-the-great-depression-hoisted-from-2013.html">The Great Depression from the Perspective of Today, and Today from the Perspective of the Great Depression: Hoisted from 2013</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/brad-delong-and-charlie-deist-on-austrian-economics.html">Brad DeLong and Charlie Deist on Austrian Economics</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/tickler-rip-joseph-froomkin-1927-harbin-china-2017-chevy-chase-md.html">R.I.P. Joseph N. Froomkin, 1927 Harbin, China - 2017 Chevy Chase, MD</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/in-which-i-find-myself-not-so-much-pro-nancy-maclean-as-anti-anti-obvious-and-true-things-nancy-maclean-wrote.html">In Which I Find Myself Not So Much Pro-Nancy MacLean as Anti-Anti-Obvious and True Things Nancy MacLean Wrote..</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/a-platonic-dialogue-about-sexual-harassment-in-and-out-of-the-workplace.html">A Platonic Dialogue About Sexual Harassment in and Out of the Workplace</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/gains-from-trade-is-comparative-advantage-the-ideology-of-the-comparatively-advantaged.html">Gains from Trade: Is Comparative Advantage the Ideology of the Comparatively Advantaged?</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/in-which-i-try-and-fail-to-understand-the-current-state-of-right-wing-monetary-economics-hoisted-from-2014.html">In Which I Try and Fail to Understand the Current State of Right-Wing Monetary Economics: Hoisted from 2014</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/on-the-negative-information-revealed-by-marvin-goodfriends-i-dont-teach-is-lm-hoisted-from-the-archives.html">On the Negative Information Revealed by Marvin Goodfriend's "I Don't Teach IS-LM": Hoisted from the Archives</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/project-syndicate-november-2017-this-week-here-at-berkeley-i-heard-great-optimism-from-the-illustrious-alice-rivlin-what.html">Technocracy at Bay</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/hoisted-from-the-archives-from-2006-the-madmen-in-the-attic.html">Madmen in the Attic: Hoisted from the Archives from 2006</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/note-to-self-getting-in-touch-with-my-inner-austrian-memo-to-self-a-start-of-a-modelhttpwwwbradford-delongc.html">Note to Self: Getting in Touch with My Inner Austrian: Toy Stochastic Processes Edition</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/monday-smackdown-trying-to-get-in-touch-with-my-inner-austrian-was-a-bad-mistake-in-2004-and-a-horrible-misjudgement-in-200.html">Monday DeLong Smackdown: Trying and Failing to Get in Touch with My Inner Austrian Back in 2004...</a></span></li>
</ul>
<hr />
<p><strong>Must-Reads</strong>:</p>
<ul>
<li><strong>Ezra Klein</strong>: <span style="text-transform: uppercase;"><a href="https://twitter.com/ezraklein/status/943618464744443904">@ezraklein on Twitter</a></span>: "I don’t know what the <em>[New York] Times</em> should’ve done with Thrush. But I watched the efforts to plant oppo and smear @lkmcgann in the aftermath of her reporting. Anyone who thinks coming forward with these experiences is easy, even now, is wrong. I am beyond proud to be her colleague..."</li>
<li><strong>Laura J Keller, Ben Steverman, and Charles Stein</strong>: <span style="text-transform: uppercase;"><a href="https://www.bloomberg.com/news/articles/2017-12-20/inside-wall-street-s-towers-traders-grouse-over-trump-tax-plan">Inside Wall Street's Towers, Traders Grouse Over Trump Tax Plan</a></span>: "Many are figuring out greater benefits will go to billionaires. One, sipping a Bloody Mary, vows to quit the Republican party...</li>
<li><strong>Martin Wolf</strong>: <span style="text-transform: uppercase;"><a href="https://www.ft.com/content/47e3e014-e3ea-11e7-97e2-916d4fbac0da">Inequality is a threat to our democracies</a></span>: "Between 1980 and 2016, the top 1 per cent captured 28 per cent of the aggregate increase in real incomes in the US, Canada and western Europe, while the bottom 50 per cent captured just 9 per cent of it...</li>
<li><strong>Jason Furman and Larry Summers</strong>: <a href="https://www.project-syndicate.org/onpoint/robert-barro-s-tax-reform-advocacy-a-response-by-jason-furman-and-lawrence-h--summers-2017-12"><span style="text-transform: uppercase;">Robert Barro’s Tax-Reform Advocacy: A Response</span></a>: "Now Barro has provided Project Syndicate with an analysis that uses his own estimates to conclude that the long-run level of output would increase by 7%...</li>
<li><strong>Samuel Bowles, Alan Kirman, and Rajiv Sethi</strong>: <a href="http://voxeu.org/article/reflections-hayek"><span style="text-transform: uppercase;">Reflections on Hayek</span></a>: "Hayek pioneered the informational view of markets in which prices are messages...</li>
<li><strong>John Maynard Keynes</strong>: <a href="http://gutenberg.net.au/ebooks03/0300071h/printall.html"><span style="text-transform: uppercase;">The General Theory of Employment, Interest, and Money</span></a>: "The austere view, which would employ a high rate of interest to check at once any tendency in the level of employment to rise appreciably above the average of; say, the previous decade...</li>
<li><strong>Naomi Janowitz</strong>: <a href="https://officehourucdpodcast.com/"><span style="text-transform: uppercase;">Office Hour Podcast</span></a>: "NAFTA with Special Guest Brad DeLong...</li>
<li><strong>Nouriel Roubini</strong>: <a href="https://www.project-syndicate.org/commentary/trump-populist-plutocracy-by-nouriel-roubini-2017-12"><span style="text-transform: uppercase;">Populist Plutocracy and the Future of America</span></a>: "Donald Trump has consistently sold out the blue-collar, socially conservative whites who brought him to power...</li>
<li><strong>Jason Furman and Larry Summers</strong>: <a href="https://www.washingtonpost.com/news/wonk/wp/2017/12/04/susan-collins-is-wrong-that-the-tax-cuts-will-pay-for-themselves-despite-the-economists-she-cites/?utm_term=.fe812203b151"><span style="text-transform: uppercase;">Susan Collins is wrong to say that the tax cuts will pay for themselves, despite the economists she cites</span></a>: "Sen. Susan Collins... defended her vote on the Senate GOP tax bill...</li>
<li><strong>Paul Krugman</strong>: <a href="https://krugman.blogs.nytimes.com/2017/12/03/la-trahison-des-clercs-economics-edition/?_r=0"><span style="text-transform: uppercase;">La Trahison des Clercs, Economics Edition</span></a>: "A former government official... asked... have any prominent Republican economists taken a strong stand against the terrible, no good, very bad tax legislation their party just rammed through the Senate?...</li>
<li><strong>Rich Yeselson</strong>: <a href="https://twitter.com/yeselson/status/937411460963225601"><span style="text-transform: uppercase;">Senator Susan Collins and Three Highly Unprofessional Republican Economists</span></a>: "Sen[ator] Collins on @MeetThePress today said that she had talked to [Holtz-]Eakins, Lindsay, and Hubbard and they believed that the supply side stimulus would produce an increase on government revenue...</li>
<li><strong>Adam Elga</strong>: <a href="https://www.princeton.edu/~adame/papers/drevil/drevil.pdf"><span style="text-transform: uppercase;">Defeating Dr. Evil with Self-Locating Belief</span></a>: "Safe in an impregnable battlestation on the moon, Dr. Evil had planned to launch a bomb that would destroy the Earth...</li>
<li><strong>Robert J. Barro, Michael J. Boskin, John Cogan, Douglas Holtz-Eakin, Glenn Hubbard, Lawrence B. Lindsey, Harvey S. Rosen, George P. Shultz and John. B. Taylor</strong> (Wednesday, November 29, 2017): <a href="https://www.washingtonpost.com/news/wonk/wp/2017/11/29/economists-respond-to-summers-furman-over-mnuchin-letter/?utm_term=.62e8ff23c5f9"><span style="text-transform: uppercase;">Economists respond to Summers, Furman over Mnuchin letter</span></a>: "First Point You Raised: Our letter addresses the impact of corporate tax reform on GDP; <strong>we did not offer claims about the speed of adjustment to a long-run result</strong> (though official revenue estimators will obviously need to do so for short-run analysis)..."</li>
<li><strong>Jason Furman and Larry Summers</strong>: <a href="https://www.ft.com/content/584e645f-fa5c-397e-933d-72e5cd7e62b3"><span style="text-transform: uppercase;">A modest proposal: time to rethink the impact of US tax reform</span></a>: "You recently wrote an open letter to Treasury Secretary Mnuchin quantifying the economic impact of tax reform...</li>
<li><strong>Enrico Moretti</strong>: <a href="https://www.nytimes.com/2017/11/03/opinion/california-fires-housing.html"><span style="text-transform: uppercase;">Fires Aren’t the Only Threat to the California Dream</span></a>: "The fires that ravaged Northern California in October claimed lives, weakened communities and scarred one of the West’s most distinctive landscapes...</li>
<li><strong>Dylan Matthews</strong>: <a href="https://www.vox.com/policy-and-politics/2017/8/8/16112368/piketty-saez-zucman-income-growth-inequality-stagnation-chart"><span style="text-transform: uppercase;">You're not imagining it: the rich really are hoarding economic growth</span></a>: "With... 'distributional national accounts'... exactly where economic growth is going...</li>
</ul>
<hr />
<p><strong>Should-Reads</strong>:</p>
<ul>
<li><strong>Kai Stinchcombe</strong>: <span style="text-transform: uppercase;"><a href="https://hackernoon.com/ten-years-in-nobody-has-come-up-with-a-use-case-for-blockchain-ee98c180100">Ten years in, nobody has come up with a use for blockchain</a></span>: "For the person paying for a product, the key feature of a new payment system...</li>
<li><strong>Greg Ip</strong>: <span style="text-transform: uppercase;"><a href="https://www.wsj.com/articles/a-tech-driven-boom-is-coming-please-be-patient-1514390400">A Tech-Driven Boom Is Coming; Please Be Patient</a></span>: "There isn’t a paradox: automation hasn’t advanced nearly as far as evangelists claim, and where it has, it’s often created more jobs than it’s destroyed...</li>
<li><strong>Noah Smith</strong>: <span style="text-transform: uppercase;"><a href="https://www.bloomberg.com/amp/view/articles/2017-12-26/a-road-map-for-reviving-the-midwest?__twitter_impression=true">A Road Map for Reviving the Midwest</a></span>: "John Austin believes that there are 'two Rust Belts'...</li>
<li><strong>Söhnke M. Bartram and Mark Grinblatt</strong>: <span style="text-transform: uppercase;"><a href="http://www.sciencedirect.com/science/article/pii/S0304405X1730315X">Agnostic fundamental analysis works</a></span>: "We take the view of a statistician with little knowledge of finance...</li>
<li><strong>Heather Boushey</strong>: <span style="text-transform: uppercase;"><a href="http://thehill.com/opinion/finance/366005-tax-bill-shouldve-been-called-the-inequality-exacerbation-act">The tax bill should've been called The Inequality Exacerbation Act</a></span>: "Policymakers should reform the corporate tax system while maintaining or increasing the level of revenues it raises...</li>
<li><strong>Morgan C. Williams</strong>: <a href="http://morganwilliamsjr.com/wp-content/uploads/2015/06/WilliamsJr_Morgan_JMP.pdf"><span style="text-transform: uppercase;">Gun Violence in Black and White: Evidence from Policy Reform in Missouri</span></a>: "On August 28, 2007 the Missouri General Assembly repealed an 86 year-old 'permitto-purchase' (PTP) law...</li>
<li><strong>Robert E. Hall and Thomas J. Sargent</strong> <span style="text-transform: uppercase;"><a href="http://www.nber.org/papers/w24148#fromrss">Short-Run and Long-Run Effects of Milton Friedman's Presidential Address</a></span>: "The immediate effect of Friedman's 1968 AEA presidential address on the economics profession was the introduction of an adaptive term in the Phillips curve...</li>
<li><strong>Charlie Stross</strong>: <span style="text-transform: uppercase;"><a href="http://www.antipope.org/charlie/blog-static/2017/11/unforseen-consequences-and-tha.html">Unforeseen Consequences and that 1929 vibe</a></span>: "We're going to run out of new BTC to mine... [then] the incentive for mining (a process essential for reconciling the public ledgers) will disappear...</li>
<li><strong>José Azar, Ioana Marinescu, Marshall I. Steinbaum</strong>: <span style="text-transform: uppercase;"><a href="http://www.nber.org/papers/w24147">Labor Market Concentration</a></span>: "A product market is concentrated when a few firms dominate the market...</li>
<li><strong>Nouriel Roubini</strong>: <span style="text-transform: uppercase;"><a href="https://www.project-syndicate.org/commentary/monetary-policy-missing-inflation-by-nouriel-roubini-2017-09">The Mystery of the Missing Inflation</a></span>: "The recent growth acceleration in the advanced economies would be expected to bring with it a pickup in inflation...</li>
<li><strong>Peter Leyden</strong>: <span style="text-transform: uppercase;"><a href="https://www.youtube.com/watch?v=4EL9uhok74w">California is the Future-of American Politics</a></span>: "The 21st-century hit California early, and the innovative state adapted quickly...</li>
<li><strong>John Maynard Keynes</strong>: <a href="http://amzn.to/2yMV0UX"><span style="text-transform: uppercase;">Essays In Biography</span></a> "If only Malthus, instead of Ricardo, had been the parent stem from which nineteenth-century economics proceeded, what a much wiser and richer place the world would be to-day!...</li>
<li><strong>Jeffrey Friedman</strong>: <a href="http://www.criticalreview.com/jf/11%203%20libertarianism.pdf"><span style="text-transform: uppercase;">What's Wrong with Libertarianism</span></a>: "Libertarian arguments about the empirical benefits of capitalism are, as yet, inadequate...</li>
<li><strong>Murat Iyigun, Nathan Nunn, and Nancy Qian</strong>: <a href="http://www.nber.org/papers/w24066"><span style="text-transform: uppercase;">The Long-run Effects of Agricultural Productivity on Conflict, 1400-1900</span></a>: "A newly digitized and geo-referenced dataset of battles...</li>
<li><strong>Zeynep Tufekci</strong>: <span style="text-transform: uppercase;"><a href="https://twitter.com/zeynep/status/943483818589204481">@zeynep on Twitter</a></span>: "Anyone who is concerned about security online...</li>
<li><strong>Noah Smith</strong>: <span style="text-transform: uppercase;"><a href="https://www.bloomberg.com/view/articles/2017-12-07/how-affordable-urban-housing-stays-affordable">How Affordable Urban Housing Stays Affordable</a></span>: "San Francisco’s black population has declined... Hispanic population has... fallen in some historically Hispanic neighborhoods like the Mission District...</li>
<li><strong>German Lopez</strong>: <span style="text-transform: uppercase;"><a href="https://www.vox.com/identities/2017/12/20/16795746/ta-nehisi-coates-cornel-west-twitter">Cornel West’s attacks on Ta-Nehisi Coates, explained - Vox</a></span>: "In discussing the “black elite leadership” that has tried to fit into “a neoliberal world,” West cited “[d]ear brother Ta-Nehisi Coates” as an example...</li>
<li><strong>Sidney Blumenthal</strong>: <span style="text-transform: uppercase;"><a href="http://amzn.to/2Bv6peQ">Wrestling With His Angel: The Political Life of Abraham Lincoln Vol. II, 1849-1856</a></span>: "When [Lincoln] hurtled on a train to Bloomington for the founding of the Illinois Republican Party on May 29, 1856, it was a familiar trip to a place he had visited many times to practice the law...</li>
<li><strong>JEC</strong>: <span style="text-transform: uppercase;"><a href="https://thatguyontheinternetsblog.blogspot.com/2017/11/the-taxonomy-of-oligarchs.html">The Taxonomy of Oligarchs</a></span>: "Rich people in America have the luxury of indulging an astonishing variety of self-destructive fantasies...</li>
<li><strong>Thomas Robert Malthus</strong>: <span style="text-transform: uppercase;">P<a href="http://oll.libertyfund.org/titles/malthus-principles-of-political-economy?q=the+two+extremes+are+obvious#Malthus_1462_89">Principles of Political Economy Considered with a View to Their Practical Application</a></span>: "We cannot too highly respect and venerate that admirable rule of Newton, not to admit more causes than are necessary... but the rule itself implies, that those which really are necessary must be admitted...</li>
<li><strong>Economist</strong>: <span style="text-transform: uppercase;"><a href="https://www.economist.com/news/christmas-specials/21732699-professions-problem-women-could-be-problem-economics-itself-women-and">Women and economics: Inefficient equilibrium</a></span>: "Donna Ginther... has found telling evidence that women... in economics... face a thicker glass ceiling...</li>
<li><strong>Alan Cole</strong>: <span style="text-transform: uppercase;"><a href="https://twitter.com/AlanMCole/status/942737972595699712">@AlanMCole on Twitter</a></span>: "Don't think this one's gonna pay for itself, guys...</li>
<li><strong>Free Exchange</strong>: <span style="text-transform: uppercase;"><a href="https://www.economist.com/news/finance-and-economics/21732529-governments-skilfully-tackled-symptoms-not-underlying-disease-decade">A decade after it hit, what was learnt from the Great Recession?</a></span>: "The success of those policies, and the relatively bearable recession that resulted, allowed governments to avoid more dramatic interventions...</li>
<li><strong>Nicholas Crafts</strong>: <a href="https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2017/twerp_1142_crafts.pdf"><span style="text-transform: uppercase;">The Postwar British Productivity Failure</span></a>: "British productivity growth disappointed during the early postwar period...</li>
<li><strong>Brink Lindsey and Steve Teles</strong>: <a href="https://niskanencenter.org/blog/news/op-ed-conservative-inequality-paradox/"><span style="text-transform: uppercase;">The Conservative Inequality Paradox</span></a>: "Conservatives have two intellectual commitments that are increasingly incompatible...</li>
<li><strong>Danny Yagan</strong>: <a href="https://eml.berkeley.edu/~yagan/Hysteresis.pdf"><span style="text-transform: uppercase;">EMPLOYMENT HYSTERESIS FROM THE GREAT RECESSION</span></a>: "This paper uses U.S. local areas as a laboratory to test whether the Great Recession depressed 2015 employment...</li>
<li><strong>Barry Eichengreen</strong>: <a href="https://www.project-syndicate.org/commentary/two-myths-about-automation-by-barry-eichengreen-2017-12"><span style="text-transform: uppercase;">Two Myths About Automation</span></a>: "Robots, machine learning, and artificial intelligence promise to change fundamentally the nature of work...</li>
<li><strong>Nathan Jensen</strong>: <a href="http://equitablegrowth.org/working-papers/exit-options-negotiations/"><span style="text-transform: uppercase;">Exit options in firm-government negotiations: An evaluation of the Texas chapter 313 program</span></a>: "A unique economic development incentive program in the state of Texas that holds almost all elements of bargaining constant...</li>
<li><strong>James Kwoka</strong>: <a href="http://equitablegrowth.org/report/u-s-merger-policy-amid-the-new-merger-wave/"><span style="text-transform: uppercase;">U.S. antitrust and competition policy amid the new merger wave</span></a>: "This dramatic and well-documented increase in concentration raises the question about its causes...</li>
<li><strong>Ben Orlin</strong>: <a href="https://mathwithbaddrawings.com/2017/12/06/the-three-barriers-to-deep-thinking-in-school/"><span style="text-transform: uppercase;">The Three Barriers to Deep Thinking in School</span></a>: "Three crude reasons why deep thinking fails to bloom...</li>
<li><strong>Jacob Levy</strong>: <a href="https://niskanencenter.org/blog/black-liberty-matters/"><span style="text-transform: uppercase;">Black Liberty Matters</span></a>: "'How is it that we hear the loudest yelps for liberty among the drivers of negroes?'...</li>
<li><strong>Jerry Taylor</strong> (2016): <a href="https://niskanencenter.org/blog/is-there-a-future-for-libertarianism/"><span style="text-transform: uppercase;">Is There a Future for Libertarianism?</span></a>: "The Rand Paul campaign and its (admittedly uneven) agenda of social tolerance, military restraint, and fiscal conservatism is little more than a very small pile of smoking embers...</li>
<li><strong>Guido Menzio and Shouyong Shi</strong>: <a href="https://web-facstaff.sas.upenn.edu/~gmenzio/linkies/MS2.pdf"><span style="text-transform: uppercase;">Efficient Search on the Job and the Business Cycle</span></a>: "A model of directed search... in which
transitions... between unemployment and employment and across employers are driven by heterogeneity in the quality of firm-worker matches...</li>
<li><strong>Michael Tomasky</strong>: <a href="https://www.thedailybeast.com/republicans-have-lost-touch-with-blue-america"><span style="text-transform: uppercase;">Republicans Have Lost Touch With Blue America</span></a>: "Blue America... is the America that produces the vast majority of our innovators and thinkers and scientists and creative people...</li>
<li><strong>David Anderson</strong>: <a href="https://www.balloon-juice.com/2017/12/04/aetna-cvs-and-data-thoughts/"><span style="text-transform: uppercase;">Aetna, CVS and data thoughts</span></a>: "This is a risk adjustment data gold mine...</li>
<li><strong>Catherine Rampell</strong>: <a href="https://www.washingtonpost.com/opinions/populism-is-dead/2017/12/04/ca75496c-d857-11e7-a841-2066faf731ef_story.html"><span style="text-transform: uppercase;">Populism died on Saturday</span></a>: "In the end, only those on the populist right successfully took over a major political party, and later the country....</li>
<li><strong>Robert Waldmann</strong> (2008): <a href="https://docs.google.com/viewer?a=v&amp;pid=sites&amp;srcid=ZGVmYXVsdGRvbWFpbnxyb2JlcnR3YWxkbWFubnxneDo3NmYxZDEzZWY1MjYyNzRm"><span style="text-transform: uppercase;">Optimal Capital Income Taxation It Is</span></a>: "The simplest... standard growth... aK model with optimizing consumers with logarithmic utility...</li>
<li><strong>Charlie Stross</strong> (2015): <a href="http://www.bradford-delong.com/2017/09/the-present-in-deep-history-charlies-diary.html"><span style="text-transform: uppercase;">The Present in Deep History</span></a>: "I'm more worried about what I used as a throw-away in 'Glasshouse' as 'cognitive dictatorships'...</li>
<li><strong>Ed Lorenzen</strong>: <a href="https://twitter.com/CaptainPAYGO/status/940294164847185920"><span style="text-transform: uppercase;">@CaptainPAYGO on Twitter</span></a>: "The Treasury Department dynamic 'analysis' of tax reform makes a mockery...</li>
<li><strong>Laura Tyson and Susan Lund</strong>: <a href="https://www.project-syndicate.org/commentary/automation-displaced-workers-transition-by-laura-tyson-and-susan-lund-2017-12"><span style="text-transform: uppercase;">Rage Against the Machine?</span></a>: "Almost every aspect of our economies will be transformed by automation in the coming years...</li>
<li><strong>Gray Kimbrough</strong>: <a href="https://twitter.com/graykimbrough/status/923538719461855232"><span style="text-transform: uppercase;">@graykimbrough on Twitter</span></a>: "Chris Ruhm...has some really stark stats on drug, alcohol, and suicide deaths by race/ethnicity 1999-2015...</li>
<li><strong>Barry Eichengreen, Donghyun Park, and Kwanho Shin</strong>: <a href="http://www.mitpressjournals.org/doi/abs/10.1162/asep_a_00544"><span style="text-transform: uppercase;">The Global Productivity Slump: Common and Country-Specific Factors</span></a>: "Productivity growth is slowing around the world...</li>
<li><strong>Simon Wren-Lewis</strong>: <a href="https://mainlymacro.blogspot.co.uk/2017/12/first-stage-reality-and-brexiters.html"><span style="text-transform: uppercase;">First Stage Reality and Brexiters</span></a>... see... the important facts... and... apply them relentlessly despite what politicians say...</li>
<li><strong>Ann Marie Marciarille</strong>: <a href="http://www.marciarille.com/2017/12/hey-hey-new-york-times-just-what-are-the-increasingly-blurred-lines-in-health-care.html"><span style="text-transform: uppercase;">Hey, Hey, New York Times: Just What Are the "Increasingly Blurred Lines" in Health Care?</span></a>: "I don't get it...</li>
<li><strong>Matt Zapotosky</strong>: <a href="https://www.washingtonpost.com/world/national-security/prominent-appeals-court-judge-alex-kozinski-accused-of-sexual-misconduct/2017/12/08/1763e2b8-d913-11e7-a841-2066faf731ef_story.html?utm_term=.7a4ae3076341"><span style="text-transform: uppercase;">Prominent Republican-Libertarian appeals court Judge Alex Kozinski</span></a>: "A former clerk for Judge Alex Kozinski said the powerful and well-known jurist...</li>
<li><strong>Matt O'Brien</strong>: <a href="https://www.washingtonpost.com/news/wonk/wp/2017/12/07/for-the-last-time-tax-cuts-dont-pay-for-themselves/?utm_term=.26b24cae236b"><span style="text-transform: uppercase;">For the last time: Tax cuts don’t pay for themselves</span></a>: "Republican politicians will pretend their tax cuts will largely pay for themselves, and... Republican economists will largely indulge them...</li>
<li><strong>Enghin Atalay, Phai Phongthiengtham, Sebastian Sotelo, and Daniel Tannenbaum</strong>: <a href="http://equitablegrowth.org/working-papers/evolving-occupational-structure/"><span style="text-transform: uppercase;">The evolving U.S. occupational structure</span></a>: "Using the text from help wanted ads, we construct a new data set of occupational task content from 1960 to 2000...</li>
<li><strong>Josh Blumenstock</strong>: <a href="https://bids.berkeley.edu/events/fighting-global-poverty-data-science"><span style="text-transform: uppercase;">Fighting Poverty with Data: Research at the Intersection of Machine Learning and Global Development</span></a>: "Work that capitalizes on recent advances in machine learning to tackle some of the problems affecting poor and marginalized populations...</li>
<li><strong>Ann Marie Marciarille</strong>: <a href="http://www.marciarille.com/2017/12/anthem-cvs-what-would-consumers-get-out-of-it.html"><span style="text-transform: uppercase;">Anthem-CVS: What Would Consumers Get Out of It?</span></a>: "The claim that all chronic care delivery will be miraculously transformed by the Anthem-CVS merger (and inevitable "me too" mergers between other drugstore chains/PBMs and other health insurers) requires a skeptical view...</li>
<li><strong>Jonathan Chait</strong>: <a href="http://nymag.com/daily/intelligencer/2017/12/the-republican-war-on-economics.html"><span style="text-transform: uppercase;">The Republican War on Economics</span></a>: "On Meet the Press Sunday, Chuck Todd asked Susan Collins how she could support a huge tax cut after having complained about excessive debt...</li>
<li><strong>Sarah Kliffe</strong>: <a href="https://www.vox.com/policy-and-politics/2017/12/4/16735496/voxcare-aetna-cvs-merger"><span style="text-transform: uppercase;">A health merger expert explains the CVS-Aetna deal</span></a>: " Martin Gaynor.... There are a lot fewer 'vertical mergers' of actors in the health care system that do different things...</li>
<li><strong>Todd Vasos</strong>: <a href="https://www.vox.com/policy-and-politics/2017/12/4/16735340/dollar-general-ceo-economy"><span style="text-transform: uppercase;">The Dollar General CEO just accidentally made clear how screwed up the economy is</span></a>: "The economy is continuing to create more of our core customer...</li>
<li><strong>Yingyi Qian</strong>: <a href="http://amzn.to/2igV1dI"><span style="text-transform: uppercase;">How Reform Worked in China: The Transition from Plan to Market</span></a>: "<strong>A noted Chinese economist examines the mechanisms behind China's economic reforms, arguing that universal principles and specific implementations are equally important</strong>...</li>
<li><strong>Austin Clemens and Heather Boushey</strong>: <a href="http://equitablegrowth.org/research-analysis/what-if-we-took-equity-into-account-when-measuring-economic-growth/"><span style="text-transform: uppercase;">What if we took equity into account when measuring economic growth?</span></a>: "The four measures shown in the graphs above could all be reasonable ways of thinking about measuring progress in the U.S. economy...</li>
<li><strong>Peng Zhang et al.</strong>: <a href="http://www.nber.org/papers/w23991"><span style="text-transform: uppercase;">Temperature Effects on Productivity and Factor Reallocation: Evidence from a Half Million Chinese Manufacturing Plants</span></a>: "This paper uses detailed production data from a half million Chinese manufacturing plants over 1998-2007...</li>
<li><strong>Greg Leiserson</strong>: <a href="http://equitablegrowth.org/research-analysis/the-tax-foundations-treatment-of-the-estate-tax-in-its-macroeconomic-model/"><span style="text-transform: uppercase;">The Tax Foundation’s treatment of the estate tax in its macroeconomic model</span></a>: "Notably, this justification for the assumption that the marginal investor is domestic even as the rate of return is fixed...</li>
<li><strong>Omar Waraich</strong>: <a href="https://twitter.com/OmarWaraich/status/937425225951711234"><span style="text-transform: uppercase;">Tom Friedman on Yemen and Mohamed bin Salman</span></a>: "'The Arab world has the potential to be a giant Yemen', warns @tomfriedman...</li>
<li><strong>Andrew B. Hall and Daniel M. Thompson</strong>: <a href="http://www.andrewbenjaminhall.com/Hall_Thompson_Base_Turnout.pdf"><span style="text-transform: uppercase;">Who Punishes Extremist Nominees?: Candidate Ideology and Turning Out the Base in U.S. Elections</span></a>: "The behavioral literature in American politics suggests that voters are not informed enough, and are too partisan, to be swing voters...</li>
<li><strong>Matt O'Brien</strong>: <a href="https://www.washingtonpost.com/news/wonk/wp/2017/12/01/republicans-are-looking-for-proof-their-tax-cuts-will-pay-for-themselves-they-wont-find-it/"><span style="text-transform: uppercase;">Republicans are looking for proof their tax cuts will pay for themselves. They won’t find it</span></a>: "The Tax Foundation... starts from the premise that the United States isn't a big open economy like it actually is, but rather a small open one like Ireland...</li>
<li><strong>Lori Ann LaRocco</strong>: <a href="https://www.cnbc.com/2017/12/01/bush-tax-cut-architect-dismisses-jct-scoring-of-the-senate-tax-bill-a-fraud.html?__source=twitter%7Cmain"><span style="text-transform: uppercase;">Bush tax-cut architect dismisses JCT scoring of the Senate tax bill a 'fraud'</span></a>: "An exclusive note from George W. Bush's former economic advisor, Larry Lindsey...</li>
<li><strong>Jagdish Bhagwati</strong>: "I agree with the main thrust of the Letter I signed, but I do not think it is likely that tax cuts will produce revenues that offset the initial loss of revenue from the tax cuts...</li>
<li><strong>Josh Barro</strong>: <a href="http://www.businessinsider.com/something-very-stupid-is-happening-in-the-senate-right-now-2017-11"><span style="text-transform: uppercase;">Something very stupid is happening in the Senate right now </span></a>: "The Joint Committee on Taxation's report on the Senate Republican tax bill was unsurprising...</li>
<li><strong>Douglas Holtz-Eakin</strong> (April 26, 2017): <a href="https://www.washingtonpost.com/opinions/trumps-tax-plan-is-built-on-a-fairy-tale/2017/04/26/4251a69c-2ab1-11e7-be51-b3fc6ff7faee_story.html?utm_term=.6e4bf118b740"><span style="text-transform: uppercase;">Trump’s tax plan is built on a fairy tale</span></a>: "Proposing trillions of dollars in tax cuts and then casually asserting that such a plan would 'pay for itself with growth', as Treasury Secretary Steven Mnuchin said, is detached from empirical reality..."</li>
<li><strong>Robert C. Allen</strong>: <a href="https://www.econstor.eu/bitstream/10419/169266/1/706.pdf"><span style="text-transform: uppercase;">Absolute Poverty: When Necessity Displaces Desire</span></a>: "A new basis for an international poverty measurement is proposed based on linear programming...</li>
<li><strong>Tom Simonite</strong>: <a href="https://www.wired.com/story/robots-threaten-bigger-slice-of-jobs-in-us-other-rich-nations/"><span style="text-transform: uppercase;">Robots Threaten Bigger Slice of Jobs in US, Other Rich Nations</span></a>: "Although the short-term disruption from automation may be smaller in developing countries than in richer countries...</li>
<li><strong>Larry Summers and Jason Furman</strong>: <a href="https://www.ft.com/content/c43d70c1-c02d-37de-9cff-bec2866b4bb2"><span style="text-transform: uppercase;">A modest proposal part II: the debate over US tax reform</span></a>: "We appreciate... you are backing off from the statement... that 'the gain in the long-run level of GDP would be just over 3 per cent, or 0.3 per cent per year for a decade'... [and] 'not offer[ing] claims about the speed of adjustment'...</li>
<li><strong>Paul Krugman</strong>: <a href="https://twitter.com/paulkrugman/status/936235738210893824"><span style="text-transform: uppercase;">@paulkrugman on Twitter: Understated NYT Headline</span></a>: <a href="https://t.co/3hrbq6mp5n">https://t.co/3hrbq6mp5n</a> "There is no analysis, because Trump admin doesn't want one—afraid it will say what all the other analyses say, which is not good for admin case. Mnuchin has been lying all along...</li>
<li><strong>Martin Feldstein</strong>: <a href="https://www.wsj.com/articles/new-priorities-for-a-new-fed-regime-1511997268"><span style="text-transform: uppercase;">New Priorities for a New Fed Regime</span></a>: "The Fed has kept the short-term federal-funds interest rate at less than the rate of inflation for nearly a decade...</li>
<li><strong>Gavyn Davies</strong>: <a href="https://www.ft.com/content/932b001f-e14d-378d-a975-b2c3d3e67f0c"><span style="text-transform: uppercase;">Marvin Goodfriend would be good for the Fed</span></a>: "Prof Goodfriend has recently argued that the FOMC should explicitly compare its policy actions with the recommendations from... a rule...</li>
<li><strong>Scott Aaronson</strong> (2013): <a href="http://amzn.to/2i0ZCkg"><span style="text-transform: uppercase;">Quantum Computing since Democritus</span></a>: "[Alan Turing's] main idea... as I read it... is a plea against meat chauvinism...</li>
<li><strong>Charlie Stross</strong>: <a href="http://www.antipope.org/charlie/blog-static/2017/11/unforseen-consequences-and-tha.html"><span style="text-transform: uppercase;">Unforeseen Consequences and that 1929</span></a>: "The mining process in combination with the hard upper limit...</li>
<li><strong>Alan Simpson and Erskine Bowles</strong>: <a href="https://mail.google.com/mail/u/0/#search/Simpson"><span style="text-transform: uppercase;">Unfortunately, the tax plan currently</span></a> under discussion... ignores nearly all the hard choices... incorporating only the 'goodies'...</li>
<li><strong>One Hundred Unprofessional Republican Economists</strong>: <a href="http://www.businessinsider.com/trump-tax-reform-opinion-congress-pass-2017-11"><span style="text-transform: uppercase;">Trump tax reform opinion: Why Congress should pass</span></a></li>
<li><strong>Kansas City Star</strong>: <a href="http://www.kansascity.com/opinion/editorials/article186974513.html"><span style="text-transform: uppercase;">Jerry Moran: Don't take failed Kansas tax plan nationwide</span></a>: "Moran... could be the deciding vote.... He has already seen, first-hand, during a very painful five years, what will happen...</li>
<li><strong>Economist</strong>: <a href="https://www.economist.com/news/books-and-arts/21731100-jean-tirole-could-have-succumbed-nobel-prize-induced-grandeur-instead-he-humbly"><span style="text-transform: uppercase;">Jean Tirole: Standing up for economists</span></a>: "Review of <em>Economics for the Common Good</em>. By Jean Tirole. Translated by Steven Rendall. Princeton University Press; 576 pages; $29.95 and £24.95...</li>
<li><strong>William Best</strong> (1824): <a href="http://oll.libertyfund.org/titles/coke-selected-writings-of-sir-edward-coke-vol-i--5"><span style="text-transform: uppercase;">Sir Edward Coke,</span></a>: "The fact is, Lord Coke had no authority for what he states...</li>
<li><strong>Nathan Jensen</strong>: <a href="http://equitablegrowth.org/tax-finance/learning-public-policy-from-amazon/"><span style="text-transform: uppercase;">Learning public policy from Amazon</span></a>: "Second, many of these state and local incentive programs are designed to provide very weak tests for providing incentives...</li>
<li><strong>Topher Spiro</strong>: <a href="https://twitter.com/TopherSpiro/status/935136678754377728"><span style="text-transform: uppercase;">@topherspiro on Twitter</span></a>: "John Harwood...</li>
<li><strong>Erik Brynjolfsson, Daniel Rock, and Chad Syverson</strong>: <a href="http://www.nber.org/chapters/c14007.pdf"><span style="text-transform: uppercase;">Artificial Intelligence and the Modern Productivity Paradox: A Clash of Expectations and Statistics</span></a>: "We describe four potential explanations for this clash of expectations and statistics...</li>
<li><strong>Andrew Prokop</strong>: <a href="https://www.vox.com/policy-and-politics/2017/11/27/16704750/senate-tax-vote-count"><span style="text-transform: uppercase;">Senate tax reform vote count: key Republicans to watch</span></a>: "At least 10 GOP senators have expressed some concerns about the current Senate bill...</li>
<li><strong>Mohamed Saleh and Jean Tirole</strong>: <a href="https://www.aeaweb.org/conference/2018/preliminary/2061?q=eNqrVipOLS7OzM8LqSxIVbKqhnGVrJQMlWp1lBKLi_OTgRwlHaWS1KJcXAgrJbESKpSZmwphFSSmg1iGBkq1XDBcXLsYbg,,"><span style="text-transform: uppercase;">Taxing Unwanted Populations: Fiscal Policy and Conversions in Early Islam</span></a>: "Hostility towards a population, whether on religious, ethnic, cultural or socioeconomic grounds...</li>
<li><strong>Angus Johnston</strong>: <a href="https://twitter.com/studentactivism/status/934959380902146048"><span style="text-transform: uppercase;">@studentactivism on Twitter</span></a>: "One more quick thing about that NYT profile of Hovater...</li>
<li><strong>Mark Koyama</strong>: <a href="https://medium.com/@MarkKoyama/the-end-of-the-past-2f028cb970ed"><span style="text-transform: uppercase;">The End of the Past</span></a>: "Temin’s GDP estimates suggest that Roman Italy had comparable per capita income to the Dutch Republic in 1600...</li>
<li><strong>Alice Sola Kim</strong>: <a href="https://twitter.com/alicek/status/934565364352061440"><span style="text-transform: uppercase;">@alicek on Twitter</span></a>: "New York Times: nazi who are you??? what do you want?...</li>
<li><strong>Mark Koyama</strong>: <a href="https://medium.com/@MarkKoyama/could-rome-have-had-an-industrial-revolution-4126717370a2"><span style="text-transform: uppercase;">Could Rome Have Had an Industrial Revolution?</span></a>: "First... those... think... market expansion is sufficient for sustained economic growth...</li>
<li><strong>Brink Lindsey and Steven Teles</strong>: <a href="http://amzn.to/2yKEm9i"><span style="text-transform: uppercase;">The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality</span></a>: "For years, America has been plagued by slow economic growth and increasing inequality...</li>
</ul>
<hr />
<p><strong>Links</strong>:</p>
<ul>
<li><strong>Joe Thompson</strong>: <span style="text-transform: uppercase;"><a href="https://www.hodinkee.com/articles/four-revolutions-introduction">Four Revolutions: A Concise History Of The Modern Watch World</a></span>: "I drove home from work that day depressed. Watches? Really? What can you possibly write about watches once a month?..."</li>
<li><strong>Christopher A Pissarides</strong>: <a href="http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.535.969&amp;rep=rep1&amp;type=pdf"><span style="text-transform: uppercase;">The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?</span></a>: "An equilibrium search model with endogenous job creation and destruction... explanations of the unemployment volatility puzzle have to preserve the cyclical volatility of wages..."</li>
<li><strong>John Maynard Keynes</strong> (1924): <span style="text-transform: uppercase;"><a href="https://delong.typepad.com/keynes-1923-a-tract-on-monetary-reform.pdf">A Tract on Monetary Reform</a></span></li>
<li><strong>Alexandra Petri</strong>: <span style="text-transform: uppercase;"><a href="https://www.washingtonpost.com/blogs/compost/wp/2015/10/13/jennifer-lawrence-has-a-point-famous-quotes-the-way-a-woman-would-have-to-say-them-during-a-meeting/?utm_term=.48dd11070292">Famous quotes, the way a woman would have to say them during a meeting</a></span>: "'Give me liberty, or give me death'. Woman in a Meeting: 'Dave, if I could, I could just—I just really feel like if we had liberty it would be terrific, and the alternative would just be awful, you know? That’s just how it strikes me. I don’t know'..."</li>
<li><strong>Max Boot</strong>: <span style="text-transform: uppercase;"><a href="http://foreignpolicy.com/2017/12/27/2017-was-the-year-i-learned-about-my-white-privilege/">2017 Was the Year I Learned About My White Privilege</a></span>: "I have benefitted from my skin color and my gender—and those of a different gender or sexuality or skin color have suffered because of it. This sounds obvious, but it wasn’t clear to me until recently. I have had my consciousness raised. Seriously..."</li>
<li><strong>Benjamin Clymer</strong>: <span style="text-transform: uppercase;"><a href="https://www.hodinkee.com/articles/apple-watch-series-3-edition-review">A Week On The Wrist: The Apple Watch Series 3 Edition</a></span>: "We look at how cellular makes a difference (hint: it does–a big one) and how the ultimate smartwatch has started to hit its stride (if you can call it a watch)..." <a href="https://www.hodinkee.com/articles/hodinkee-apple-watch-review">https://www.hodinkee.com/articles/hodinkee-apple-watch-review</a></li>
<li><strong>Jennifer Williams</strong>: <span style="text-transform: uppercase;"><a href="https://www.vox.com/2017-in-review/2017/12/27/16810186/trump-2017-foreign-policy-russia-twitter">Trump foreign policy 2017: 9 bizarre things you forgot Trump did - Vox</a></span>: "President Trump has gotten the US locked in a military standoff with North Korea, thrown the future of the Iran nuclear deal into doubt, weakened NATO, emboldened Russia, and triggered a diplomatic crisis over Jerusalem.And he’s done that all in under 12 months.... It’s easy to lose sight of the other weird, inappropriate, or just plain bizarre things Trump did on the world stage in 2017..."</li>
<li><strong>Noah Smith</strong>: <span style="text-transform: uppercase;"><a href="https://www.bloomberg.com/view/articles/2017-12-27/rent-for-the-poor-really-is-too-high">Rent for the Poor Really Is Too High</a></span>: "After paying for housing, those in the lowest income bracket have little left for life's essentials..."</li>
<li><strong>Olivier Blanchard, Eugenio Cerutti, and Lawrence Summers</strong>: <span style="text-transform: uppercase;"><a href="https://www.imf.org/external/pubs/ft/wp/2015/wp15230.pdf">Inflation and Activity: Two Explorations and their Monetary Policy Implications</a></span>: " We find that the effect of unemployment on inflation, for given expected inflation, decreased until the early 1990s, but has remained roughly stable since then...."</li>
<li><strong>Olivier Blanchard</strong>: <span style="text-transform: uppercase;"><a href="https://piie.com/publications/pb/pb16-1.pdf">The US Phillips Curve: Back to the 60s?</a></span>: "the US Phillips curve is alive. (I wish I could say “alive and well,” but it would be an overstatement: The relation has never been very tight.)..."</li>
<li><strong>Douglas O. Staiger, James H. Stock, and Mark W. Watson</strong>: <span style="text-transform: uppercase;"><a href="http://www.nber.org/chapters/c8885.pdf">How Precise Are Estimates of the Natural Rate of Unemployment?</a></span>: "The natural rate is measured quite imprecisely... the NAIRU in 1990 is 6.2%, with a 95% confidence interval for the NAIRU in 1990 being 5.1% to 7.7%..."</li>
<li><strong>William Flesch</strong>: <span style="text-transform: uppercase;"><a href="http://amzn.to/2DTbmz3">Amazon.com: Comeuppance: Costly Signaling, Altruistic Punishment, and Other Biological Components of Fiction (9780674032286): : Books</a></span></li>
<li><strong>J. Bradford De Long</strong>: <span style="text-transform: uppercase;"><a href="http://www.nber.org/chapters/c8886.pdf">America’s Peacetime Inflation: The 1970s</a></span></li>
<li><strong>L.F. Menabrea and Augusta Ada King-Noel</strong>: <span style="text-transform: uppercase;"><a href="http://www.fourmilab.ch/babbage/sketch.html">Sketch of the Analytical Engine Invented by Charles Babbage</a></span>: "With notes upon the Memoir by the Translator..."</li>
<li><strong>California Department of Housing and Community Developmenet</strong>: <span style="text-transform: uppercase;"><a href="http://www.hcd.ca.gov/policy-research/docs/2016-12-12-ADU-TA-Memo.docx.pdf">Where Foundations Begin: Accessory Dwelling Unit Memorandum</a></span></li>
<li><strong>Laura Tyson</strong>: <span style="text-transform: uppercase;"><a href="http://reinvent.net/events/event/in-the-wake-of-the-senates-tax-bill-what-does-our-economic-future-look-like/">In the Wake of the Senate’s Tax Bill, What Does Our Economic Future Look Like?</a></span>: "The U.S. Senate just passed a tax bill which is in every feature going in the wrong direction..."</li>
<li><strong>Jesse Shapiro</strong>: <span style="text-transform: uppercase;"><a href="http://www.brown.edu/Research/Shapiro/pdfs/applied_micro_slides.pdf">How to Give an Applied Micro Talk</a></span></li>
<li><strong>Ramez Naam</strong>: <span style="text-transform: uppercase;"><a href="https://www.roadtovr.com/the-future-of-invasive-neural-interfaces-uploading-consciousness-with-ramez-naam/">The Future of Invasive Neural Interfaces</a></span></li>
<li><strong>Austin Clemens</strong>: <span style="text-transform: uppercase;"><a href="http://equitablegrowth.org/equitablog/value-added/new-worldwide-report-on-inequality-shows-how-the-united-states-compares/">New worldwide report on inequality shows how the United States compares</a></span>: "Although income inequality increased everywhere between 1980 and 2016, it increased at an especially rapid clip in the United States, eclipsing the rate of increase in other developed nations..."</li>
<li><strong>Lawrence Norden, Shyamala Ramakrishna, and Sidni Frederick</strong>: <span style="text-transform: uppercase;"><a href="https://www.brennancenter.org/blog/how-citizens-united-changed-politics-and-shaped-tax-bill#.Wjwn6vDQoHY.twitter">How Citizens United Changed Politics and Shaped the Tax Bill</a></span>: "The real impact of an unregulated campaign finance is on policy, and the proof is in this year’s tax bill..."</li>
<li><strong>Nathaniel Lane</strong>: <span style="text-transform: uppercase;"><a href="http://voxdev.org/topic/firms-trade/manufacturing-revolutions-role-industrial-policy-south-korea-s-industrialisation">Manufacturing revolutions: The role of industrial policy in South Korea’s industrialisation</a></span>: "Big push policies spurred rapid industrial development in treated industries... an average of 80% more than non-targeted manufacturing industries, after 1973..."</li>
<li><strong>Katja Mann and Lukas Püttmann</strong>: <span style="text-transform: uppercase;"><a href="http://voxeu.org/article/benign-effects-automation-new-evidence">Benign effects of automation: New evidence</a></span>: "A new indicator of automation constructed by applying a machine learning algorithm to classify patents... suggests that automation has created more jobs in the US than it has destroyed..."</li>
<li><strong>Caroline Freund</strong>: <span style="text-transform: uppercase;"><a href="https://piie.com/blogs/trade-investment-policy-watch/united-states-wins-trade-agreements">The United States Wins from Trade Agreements</a></span>: "Trump is right that trade agreements have been one-sided—but he is wrong about the direction. Recent US trade deals, both multilateral and bilateral, have involved much bigger tariff cuts by US trading partners than by the United States..."</li>
<li><strong>Ezra Klein</strong>: <span style="text-transform: uppercase;"><a href="https://www.vox.com/policy-and-politics/2017/12/18/16782484/gop-tax-bill-cuts-reform-republican">The Republican tax bill is an American betrayal</a></span>: "The American people voted for populism. They got plutocracy..."</li>
<li><strong>Charlie Jane Anders</strong>: <span style="text-transform: uppercase;"><a href="https://www.facebook.com/events/2630720230401399/">(Writers With Drinks: Amelia Gray, Kate Elliott and more!</a></span>: "Saturday, January 13, 2018 at 7:30 PM..."</li>
<li><strong>William G. Gale, Surachai Khitatrakun, and Aaron Krupkin</strong>: <span style="text-transform: uppercase;"><a href="http://www.taxpolicycenter.org/publications/winners-and-losers-after-paying-tax-cuts-and-jobs-act/full">Winners and Losers After Paying for the Tax Cuts and Jobs Act</a></span></li>
<li><strong>Tom Nichols</strong>: <span style="text-transform: uppercase;"><a href="https://www.washingtonpost.com/opinions/shame-worked-in-alabama/2017/12/18/18c843c8-e422-11e7-ab50-621fe0588340_story.html?utm_term=.ac928b97298a">Shame worked in Alabama</a></span>: "Personally, I am in the 'shame and scold' camp. The 'engage and understand' approach is based on the deeply flawed assumption that these voters don’t know what they are doing..."</li>
<li><strong>Noah Smith</strong>: <span style="text-transform: uppercase;"><a href="https://www.bloomberg.com/view/articles/2017-12-13/sorry-but-economics-isn-t-astrology-for-dudes">Sorry, But Economics Isn't 'Astrology for Dudes'</a><span>: "The dismal science can explain lots of things with data and theory. Astrologers explain nothing..."</li>
<li><strong>Dan Shaviro</strong>: <span style="text-transform: uppercase;"><a href="https://danshaviro.blogspot.de/2017/12/under-new-tax-bill-lose-money-before.html">Start Making Sense: Under the new tax bill, lose money before tax but make money after-tax</a></span>: "Our revised Tax Games report should be out within a day or two. (The original is still here.)..."</li>
<li><strong>Mamta Badkar</strong>: <span style="text-transform: uppercase;"><a href="https://www.ft.com/content/ce267791-443a-3066-b102-ffe96ea014ec">Kashkari cites inflation, flattening yield curve for dissent</a></span>: "Kashkari has now voted against rate rises three time this year.... 'In response to our rate hikes, the yield curve has flattened significantly, potentially signaling an increasing risk of a recession'..."</li>
<li><strong>JEC</strong>: <span style="text-transform: uppercase;"><a href="https://meansquarederrors.blogspot.com/2016/09/the-next-new-macro.html">The Next New Macro</a></span>: "I have my own notions about the best way forward.... I could easily be wrong.... Maybe we'll be able to retire the Robert E. Lucas Jr. Award For Derailing An Entire Discipline without ever bestowing it on a second recipient..."</li>
<li><strong>JEC</strong>: <span style="text-transform: uppercase;"><a href="https://meansquarederrors.blogspot.com/2016/09/houdinis-straightjacket.html">Houdini's Straightjacket</a></span>: "If after thirty years of study economists failed to 'fully appreciate the Keynesian mechanisms present in the model', one might wonder exactly what such models have to recommend themselves. What is the advantage of an intellectually demanding and mathematically complex modelling approach that makes it harder to actually get the job done? The answer, I suspect, is that 'intellectually demanding and mathematically complex' has become an end in itself..."</li>
<li><strong>Stanford</strong>: <a href="http://dci.stanford.edu/program-overview/"><span style="text-transform: uppercase;">Distinguished Careers Institute</span></a></li>
<li><strong>Bridget Ansel</strong>: <a href="http://equitablegrowth.org/equitablog/value-added/the-gender-gap-in-economics-has-ramifications-far-beyond-the-ivory-tower/"><span style="text-transform: uppercase;">The gender gap in economics has ramifications far beyond the ivory tower</span></a>: "Some female economists have spoken up about how they’ve been discouraged by male colleagues from explicitly studying gender until they have received tenure.... Former Federal Reserve Bank of Minneapolis President Narayana Kocherlakota reflected on how the lack of racial and ethnic diversity within the Federal Reserve system created blind spots with tangible effects on communities of color..."</li>
<li><strong>Dani Rodrik and Roberto M. Unger</strong>: <a href="https://drodrik.scholar.harvard.edu/files/dani-rodrik/files/political_economy_after_the_crisis_syllabus_2018.pdf"><span style="text-transform: uppercase;"></span></a></li>
<li><strong>Oliver Willis</strong>: <a href="https://shareblue.com/after-black-voters-win-alabama-election-gop-declares-their-votes-dont-count/#.WjGkefPhYHY.twitter"><span style="text-transform: uppercase;">After black voters win Alabama election, GOP declares their votes don't count</span></a>: "Republican National Committee chairwoman Ronna McDaniel... 'Doug Jones now answers to Alabamians, who overwhelmingly support President Trump’s conservative agenda, not Schumer &amp; Democrat party bosses who prioritize obstruction over tax cuts and economic revival for Americans...'"</li>
<li><strong>Adam Serwer</strong>: <a href="https://twitter.com/AdamSerwer/status/941060712511819776"><span style="text-transform: uppercase;">@adamserwe on Twitter</span></a>: "There's a lesson here about how much 'ironic racism' from non-Nazis is just racism..." <strong>Eve Peysar</strong>: <a href="https://twitter.com/evepeyser/status/941058338267246592"><span style="text-transform: uppercase;">@evepeyser on Twitter: </span></a>: "The way the <em>Daily Stormer</em> style guide directs writers to use irony to mask their genocidal bigotry is insane and also, totally expected..."</li>
<li><strong>Douglas Clement</strong>: <a href="https://www.minneapolisfed.org/publications/the-region/interview-with-anne-case"><span style="text-transform: uppercase;">Interview with Anne Case</span></a>: "Princeton economist on the cost of AIDS in South Africa, “deaths of despair” in the U.S. and women in economics..."</li>
<li><strong>Martin Wolf</strong>: <a href="https://www.ft.com/content/2b9f4180-de74-11e7-8f9f-de1c2175f5ce"><span style="text-transform: uppercase;">Conventional wisdom on Japan is wrong</span></a>: "Solving its economic problems means doing something about private sector surpluses..."</li>
<li><strong>Bob Brigham</strong>: <a href="https://www.rawstory.com/2017/12/florida-rally-cheers-when-republican-predicts-trumps-jerusalem-embassy-decision-may-usher-in-armageddon/#.Wis7chnt-Zp.twitter"><span style="text-transform: uppercase;">Florida rally cheers when Republican predicts Trump’s Jerusalem embassy decision may usher in Armageddon</span></a></li>
<li><strong>Adora Lily Svitak</strong>: <a href="http://matrix.berkeley.edu/research/changing-face-economics"><span style="text-transform: uppercase;">Changing the Face of Economics</span></a>: "UC Berkeley economics professor Dr. Martha Olney explains the importance of diversity in the field, and why she supports initiatives designed to welcome underrepresented groups to the major..."</li>
<li><strong>Austin Frakt</strong>: <a href="https://www.nytimes.com/2017/12/11/upshot/people-dont-take-their-pills-only-one-thing-seems-to-help.html?smid=tw-upshotnyt&amp;smtyp=cur&amp;_r=0"><span style="text-transform: uppercase;">People Don’t Take Their Pills. Only One Thing Seems to Help</span></a>: "People Don’t Take Their Pills. Only One Thing Seems to Help.
High-tech approaches and 'reminder' packaging don’t work well. Reducing prices does..."</li>
<li><strong>Albert Silver</strong>: <a href="https://en.chessbase.com/post/the-future-is-here-alphazero-learns-chess?_utm_source=1-2-2"><span style="text-transform: uppercase;">The future is here–AlphaZero learns chess</span></a></li>
<li><strong>Cory Doctorow</strong>: <a href="https://boingboing.net/2017/12/08/dr-pappy-shaw.html"><span style="text-transform: uppercase;">Square dancing was a racist hoax funded by Henry Ford to get white people to stop dancing to black music</span></a>: "Wonkette writer Robyn Pennacchia went on a brilliant Twitter rant about the strange history of square dancing, which is not an old American tradition, but rather a 20th century hoax.... Ford even got school districts to teach square dancing in gym classes, and convinced 27 states to make square dancing their official state dances..."</li>
<li><a href="http://bookforum.com/blog/"><span style="text-transform: uppercase;">Bookforum</span></a></li>
<li><strong>Ronald Brownstein</strong>: <a href="http://www.cnn.com/2017/12/05/politics/white-women-class-divide-gender-divide/index.html"><span style="text-transform: uppercase;">These are the women who could elect Roy Moore</span></a>: "In the 2016 race, the class gap between whites of the same gender was much larger than the gender gap between whites of the same class..."</li>
<li><strong>Dani Rodrik</strong>: <a href="https://www.project-syndicate.org/commentary/separating-private-and-public-finance-in-europe-by-dani-rodrik-2017-12"><span style="text-transform: uppercase;">Does Europe Really Need Fiscal and Political Union?</span></a>: "There is also an alternative, much less ambitious view, according to which only banking union is needed..."</li>
<li><em>*Noah Smith</em>: <a href="https://www.bloomberg.com/view/articles/2017-12-05/robot-takeover-matters-less-if-we-re-all-shareholders"><span style="text-transform: uppercase;">Robot Takeover Matters Less If We're All Shareholders</span></a>: "A social welfare fund that benefits every American would cushion human obsolescence...."</li>
<li><strong>Fabio Ghironi</strong>: <a href="http://voxeu.org/vox-talks/macro-needs-micro"><span style="text-transform: uppercase;">Macro needs micro</span></a>: "Macroeconomists have accepted that their tools need to incorporate more real world phenomena, such as financial intermediation and labor market frictions... [plus] the need to incorporate more microeconomics to macroeconomics..."</li>
<li><strong>Josh Marshall</strong>: <a href="http://talkingpointsmemo.com/edblog/serve-your-constituency"><span style="text-transform: uppercase;">Serve Your Constituency</span></a>: "It’s not the press’s fault that Donald Trump is still President and Al Franken is about to be an ex-senator. The same applies to Roy Moore. All of these incidents play out based on the constituency of the accused..."</li>
<li><strong>Ben Ost, Weixiang Pan, and Douglas Webber</strong>: <a href="http://www.journals.uchicago.edu/doi/10.1086/696204"><span style="text-transform: uppercase;">The Returns to College Persistence for Marginal Students: Regression Discontinuity Evidence from University Dismissal Policies</span></a></li>
<li><strong>Rana Foroohar</strong>: <a href="https://www.cfr.org/event/conversation-john-c-bogle"><span style="text-transform: uppercase;">A Conversation With John C. Bogle</span></a></li>
<li><strong>Michael Bauer</strong>: <a href="http://projects.sfchronicle.com/2017/top-100-restaurants/"><span style="text-transform: uppercase;">Top 100 Bay Area Restaurants 2017</span></a></li>
<li><a href="https://blumcenter.berkeley.edu/about/team/"><span style="text-transform: uppercase;">Team – Blum Center</span></a></li>
<li><strong>Brad DeLong</strong> (2013): <a href="http://delong.typepad.com/sdj/2013/05/niall-ferguson-is-wrong-to-say-that-he-is-doubly-stupid-why-did-keynes-write-in-the-long-run-we-are-all-dead-weblogging.html"><span style="text-transform: uppercase;">Niall Ferguson Is Wrong to Say That He Is Doubly Stupid: Why Did Keynes Write "In the Long Run We Are All Dead"? Weblogging</span></a></li>
<li><strong>Melissa Dell, Nathan Lane, and Pablo Querubin</strong>: <a href="https://scholar.harvard.edu/files/dell/files/170101master.pdf"><span style="text-transform: uppercase;">The Historical State, Local Collective Action, and Economic Development in Vietnam</span></a>: "[In] Dai Viet... the village was the fundamental administrative unit. Southern Vietnam was a peripheral tributary of the Khmer... a patron-client model.... In villages with a strong historical state, citizens have been better able to organize for public goods and redistribution through civil society and local government..."</li>
<li><strong>Michael Leachman</strong>: <a href="https://www.cbpp.org/blog/house-district-map-partial-salt-repeal-kills-most-valuable-part-of-deduction"><span style="text-transform: uppercase;">House District Map: Partial SALT Repeal Kills Most Valuable Part of Deduction</span></a></li>
<li><strong>Mike Konczal and Marshall Steinbaum</strong>: <a href="https://democracyjournal.org/magazine/43/its-still-not-the-supply-side/"><span style="text-transform: uppercase;">It’s Still Not the Supply Side</span></a>: "Yes, workers should be able to move and work freely. But economics remains fundamentally about power. A response to the 'What’s Holding Us Back?' symposium..."</li>
<li><strong>Craig Garthwaite and Fiona Scott Morton</strong>: <a href="https://promarket.org/perverse-market-incentives-encourage-high-prescription-drug-prices/"><span style="text-transform: uppercase;">Perverse Market Incentives Encourage High Prescription Drug Prices</span></a>: "Pharmacy benefit managers (PBMs)... claim to be a lone bulwark against the rapacious pricing decisions of pharmaceutical firms, but is recent consolidation in the PBM market also a driver of high prices for prescription drugs?..."</li>
<li><strong>Nick Bunker</strong>: <a href="http://equitablegrowth.org/equitablog/value-added/ten-years-after-the-beginning-of-the-great-recession-is-it-time-to-abandon-the-natural-rate-hypothesis/"><span style="text-transform: uppercase;">Ten years after the beginning of the Great Recession, is it time to abandon the natural rate hypothesis?</span></a>: "Understanding how much the chance of long-term unemployed workers getting a job varies over the business cycle of an economy could help determine the level of persistence of recessions.... A better understanding of what determines households’ inflation expectations will result in a stronger test of the accelerationist hypothesis..."</li>
<li><strong>Brad DeLong</strong> (2015): <a href="https://medium.com/bull-market/the-last-time-i-saw-richard-thaler-speak-he-talked-about-the-beauty-contest-game-in-the-beauty-2e0b767d9098"><span style="text-transform: uppercase;">The last time I saw Richard Thaler speak, he talked about the “Beauty Contest” game</span></a>: "'An Infinite Regress. Of Dumb': More Reflections on 'Market Efficiency': tl;dr: Richard Thaler is a genius. His arguments for the importance of behavioral finance are unanswerable..."</li>
<li><strong>Lyndon Johnson</strong> (1964): <a href="http://www.presidency.ucsb.edu/ws/index.php?pid=26585"><span style="text-transform: uppercase;">Remarks at a Fundraising Dinner in New Orleans</span></a></li>
<li><strong>@DynamicWebPaige</strong>: <a href="https://twitter.com/DynamicWebPaige/status/937369851248726016"><span style="text-transform: uppercase;">"It is an unfortunate reality</span></a> that academia does not consider software engineering or tool-building valid areas of academic work—but if libraries like ggplot2 and scikit-learn were referenced as often as they were used in research papers, that paradigm might shift..."</li>
<li><strong>Bob Hall</strong> (2005): <a href="http://www.bradford-delong.com/2005/05/bob_hall_correc.html?asset_id=6a00e551f08003883400e55238bf768834"><span style="text-transform: uppercase;">Bob Hall Corrects the Record...</span></a>: "[My] roots in programming... on a decimal machine.... The internal name of the 1620 at IBM was Cadet, which was rumored to stand for Can't Add, Doesn't Even Try, because it used a table for addition rather than having addition hardware..."</li>
<li><strong>Leslie Peirce</strong>: <a href="http://amzn.to/2AmGt6N"><span style="text-transform: uppercase;">Empress of the East: How a European Slave Girl Became Queen of the Ottoman Empire</span></a></li>
<li><strong>Jeffrey Friedman</strong>: <a href="https://niskanencenter.org/blog/public-choice-theory-politics-charity/"><span style="text-transform: uppercase;">Public Choice Theory and the Politics of Good and Evil</span></a>: "It is rich to read public-choice libertarians begging MacLean for interpretive charity. Their entire careers have been dedicated to denying interpretive charity to the political actors with whom they disagree..."</li>
<li><strong>Will Wilkinson</strong>: <a href="https://niskanencenter.org/blog/libertarian-democracy-skepticism-infected-american-right/"><span style="text-transform: uppercase;">How Libertarian Democracy Skepticism Infected the American Right</span></a>: "Antipathy to democracy, ranging from uneasiness to outright hostility, became part of the right’s DNA, and it still is today..."</li>
<li><strong>Jacob Levy</strong>: <a href="https://niskanencenter.org/blog/black-liberty-matters/"><span style="text-transform: uppercase;">Black Liberty Matters</span></a>: "Reorienting a set of ideas and ideals in light of a morally compromised history, of understanding what lessons need to be learned from it, of separating the arguments for liberty from the yelps, is insiders’ work. No one else is going to do it for us..."</li>
<li><strong>Arif Dirlik</strong>: <a href="https://twitter.com/pseudoerasmus/status/814087415564533760"><span style="text-transform: uppercase;">"'When, exactly... does the 'post-colonial' begin?'</span></a> When Third World intellectuals have arrived in First World academe..."</li>
<li><strong>Josh Bivens</strong>: <a href="http://www.epi.org/press/senate-tax-bill-is-a-scam-through-and-through/"><span style="text-transform: uppercase;">Senate tax bill is a scam, through-and-through</span></a>: "Besides lying about who would benefit most directly from the tax cut, defenders of today’s bill have also lied about the trickle-down benefits that will accrue to workers in the form of higher wages..."</li>
<li><strong>Brad DeLong</strong> (2002): <a href="http://www.j-bradford-delong.net/movable_type/archives/001144.html"><span style="text-transform: uppercase;">Wile E. Coyote Explains Bush Administration Fiscal Policy: Archive Entry From Brad DeLong's Webjournal</span></a></li>
<li><strong>Dylan Scott and Alvin Chang</strong>: <a href="https://www.vox.com/policy-and-politics/2017/12/2/16720952/senate-tax-bill-inequality"><span style="text-transform: uppercase;">The Republican tax bill will exacerbate income inequality in America</span></a>: "The bill is investing heavily in the wealthy and their children.”</li>
<li><strong>Elizabeth Bruenig</strong>: <a href="https://twitter.com/"><span style="text-transform: uppercase;">Life Comes at You at a Predictable Pace</span></a>: "The alt right is having a fight because a couple of the major 'demographic decline' female youtube stars aren't having kids for the same reason all the other women aren't lol..."</li>
<li><strong>Simon Wren-Lewis</strong>: <a href="https://mainlymacro.blogspot.co.uk/2017/12/if-we-treat-plutocracy-as-democracy.html"><span style="text-transform: uppercase;">If we treat plutocracy as democracy, democracy dies</span></a>: "We are very close to a point where neoliberalism becomes something much worse.... Escaping this fate, and rescuing democracy... has to involve a democratic defeat of the right wing parties that allowed this plutocracy to emerge, and indeed encouraged it and then made bargains with it when it believed it was still in control..."</li>
<li><strong>Eshe Nelson</strong>: <a href="https://qz.com/1140481/a-nobel-laureate-explains-why-we-get-the-bad-economic-policies-we-deserve/"><span style="text-transform: uppercase;">Nobel laureate Jean Tirole explains why we get the bad economic policies we deserve</span></a>: "The Frenchman’s--- <em>Economics for the Common Good</em>... is a 560-page manifesto on how the profession can get back on track..."</li>
<li><strong>Annie Lowrey</strong>: <a href="https://www.theatlantic.com/business/archive/2017/12/great-recession-still-with-us/547268/"><span style="text-transform: uppercase;">How the Great Recession Continues to Shape America</span></a>: "The downturn left the country poorer and more unequal than it would have been otherwise..."</li>
<li><a href="https://www.souvenir-coffee.com/"><span style="text-transform: uppercase;">Souvenir Coffee</span></a></li>
<li><strong>David Frum</strong>: <a href="https://twitter.com/"><span style="text-transform: uppercase;">"KT McFarland understood</span></a> why Flynn talks with Kislyak about sanctions relief were first hushed up and then lied about: because Trump WH saw as clearly as anyone that the relief looked like payback for Russia's help in 2016 election..."</li>
<li><strong>Michael Bennet</strong>: <a href="https://s3.amazonaws.com/sdmc-media.senate.gov/BENNET/2017+12+01+Bennet+Floor+Speech+Tax+Cuts+v1.mp4"><span style="text-transform: uppercase;">The Tax "Reform" Bill</span></a></li>
<li><strong>Robert Rubin</strong>: <a href="https://www.washingtonpost.com/opinions/no-serious-lawmaker-should-support-this-tax-bill/2017/11/29/7eb0c8e2-d552-11e7-a986-d0a9770d9a3e_story.html"><span style="text-transform: uppercase;">No serious lawmaker should support this tax bill</span></a></li>
<li><a href="https://www.ptable.com/"><span style="text-transform: uppercase;">Dynamic Periodic Table</span></a></li>
<li><strong>Michael Schmidt et al.</strong>: <a href="https://www.nytimes.com/2017/04/22/us/politics/james-comey-election.html"><span style="text-transform: uppercase;">Comey Tried to Shield the F.B.I. From Politics. Then He Shaped an Election</span></a>: "As the F.B.I. investigated Hillary Clinton and the Trump campaign, James B. Comey tried to keep the bureau out of politics but plunged it into the center of a bitter election..."</li>
<li><strong>Andrew Prokop, Zack Beauchamp, and Alex Ward</strong>: <a href="https://www.vox.com/2017/12/1/16706534/michael-flynn-fbi-charged-deal"><span style="text-transform: uppercase;">Michael Flynn is concluding a plea deal with prosecutors. Trump should be very worried</span></a>: "This is the biggest development in the Trump-Russia story yet..."</li>
<li><strong>Alexander Klein and Sheilagh Ogilvie</strong>: <a href="https://www.kent.ac.uk/economics/documents/research/papers/2017/1717.pdf"><span style="text-transform: uppercase;">Was Domar Right?: Serfdom and Factor Endowments in Bohemia</span></a>: "Higher land-labor ratios... increase[d] coercion. The effect greatly increased when animal labor was included, and diminished as land-labor ratios rose..."</li>
<li><strong>Toluse Olurrunipa</strong>: <a href="https://www.bloomberg.com/news/articles/2017-11-29/trump-s-tax-promises-undercut-by-ceo-plans-to-reward-investors"><span style="text-transform: uppercase;">Trump's Tax Promises Undercut by CEO Plans to Reward Investors</span></a></li>
<li><strong>Steven M. Rosenthal</strong>: <a href="http://www.taxpolicycenter.org/taxvox/current-tax-reform-bills-could-encourage-us-jobs-factories-and-profits-shift-overseas"><span style="text-transform: uppercase;">Current Tax Reform Bills Could Encourage US Jobs, Factories and Profits to Shift Overseas</span></a></li>
<li><strong>Max Roser</strong>: <a href="https://ourworldindata.org/a-history-of-global-living-conditions-in-5-charts/"><span style="text-transform: uppercase;">The short history of global living conditions and why it matters that we know it</span></a></li>
<li><strong>Aline Butikofer, Katrine Løken, and Kjell Salvanes</strong>: <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2877256"><span style="text-transform: uppercase;">Infant Health Care and Long-Term Outcomes</span></a>: "Access to mother and child health care centers in the first year of life increased the completed years of schooling by 0.15 years and earnings by two percent..."</li>
<li><strong>Martin Wolf</strong>: <a href="https://www.ft.com/content/06efe986-d52b-11e7-a303-9060cb1e5f44"><span style="text-transform: uppercase;">Six impossible notions about ‘global Britain’</span></a>: "The UK is no longer its 19th-century self, but a second-rank power in decline..."</li>
<li><strong>Richard Rubin and Nick Timiraos</strong>: <a href="https://www.wsj.com/livecoverage/tax-bill-2017/card/1511893090"><span style="text-transform: uppercase;">Official Growth Estimate for Tax Bill Will Assume 'Aggressive' Fed Response</span></a></li>
<li><strong>Jason Furman</strong>: <a href="https://twitter.com/jasonfurman/status/935163524321546240"><span style="text-transform: uppercase;">@jasonfurman on Twitter</span></a>: "Disappointed that so many Republican economists would sign on to a letter that completely distorts the evidence on the growth effects of tax cuts..."</li>
<li><strong>Chad Bolt</strong>: <a href="https://twitter.com/chadderr/status/935216851919036416"><span style="text-transform: uppercase;">"We have apparently now hit The Rubio Point</span></a> on the #GOPTaxScam. Rubio Point = moment in time where so many other senators 'have concerns' with something that even a Senator as spineless as Florida Man decides it's safe to pile on..."</li>
<li><strong>Hylke Vandenbussche, William Connell, and Wouter Simons</strong>: <a href="http://voxeu.org/article/global-value-chains-and-brexit"><span style="text-transform: uppercase;">Global value chains and Brexit | VOX, CEPR’s Policy Portal</span></a>: "Hard Brexit suggests a loss of 4.47% of UK GDP, again four times as much as a soft Brexit (1.21%)..."</li>
<li><strong>Dylan Scott</strong>: <a href="https://www.vox.com/policy-and-politics/2017/11/28/16705420/senate-tax-bill-donald-trump"><span style="text-transform: uppercase;">Trump’s phony populism is fully exposed in the Republican tax bill</span></a></li>
<li><strong>Topher Spiro</strong>: <a href="https://twitter.com/TopherSpiro/status/935218874731126784"><span style="text-transform: uppercase;">@topherspiro on Twitter</span></a>: "The press is not adequately covering the key issue.... McCain, Corker, Flake, Moran, and others have said they will vote no if they’re convinced the bill will increase deficits.... Luckily for Republicans, the conservative Tax Foundation is here to magically supply the numbers they need..."</li>
<li><strong>Scott Aaronson</strong>: <a href="https://www.youtube.com/watch?v=JvIbrDR1G_c"><span style="text-transform: uppercase;">(45) What Quantum Computing Isn't</span></a>: "What we cannot do—even with computers we do not have..."</li>
<li><strong>Wikipedia</strong>: <a href="https://en.m.wikipedia.org/wiki/Aumann%27s_agreement_theorem?wprov=sfla1"><span style="text-transform: uppercase;">Aumann's agreement theorem</span></a></li>
<li><strong>Andrew Granato</strong>: <a href="https://stanfordpolitics.org/2017/11/27/peter-thiel-cover-story/"><span style="text-transform: uppercase;">How Peter Thiel and the Stanford Review Built a Silicon Valley Empire</span></a>: "Thiel has become a national figure of controversy for, among other things, claiming that 'the extension of the franchise to women… render[s] the notion of "capitalist democracy" into an oxymoron', saying, 'I no longer believe that freedom and democracy are compatible', funding a fellowship that specifically tries to get undergraduates to drop out of college, and donating $1.25 million to Donald Trump’s campaign a week after a tape was released in which the then-candidate discussed how he could grope young female actresses and get away with it..."</li>
<li><strong>Noah Smith</strong>: <a href="https://www.bloomberg.com/view/articles/2017-11-22/socialism-and-capitalism-work-together"><span style="text-transform: uppercase;">Socialism and Capitalism Work Together</span></a>: "Redistribution policies have helped to lift billions of people out of extreme poverty..."; <a href="https://www.bloomberg.com/view/articles/2017-11-27/the-economics-data-revolution-has-growing-pains"><span style="text-transform: uppercase;">The Economics Data Revolution Has Growing Pains</span></a>: "Too many studies use small sample sizes that give false positives..."; <a href="https://www.bloomberg.com/view/articles/2017-11-21/immigrants-do-a-great-job-at-becoming-americans"><span style="text-transform: uppercase;">Immigrants Do a Great Job at Becoming Americans</span></a>: "They quickly adapt to the culture, learn English and intermarry..."; <a href="https://www.bloomberg.com/view/articles/2017-11-16/the-robot-revolution-is-coming-just-be-patient"><span style="text-transform: uppercase;">The Robot Revolution Is Coming. Just Be Patient</span></a>: "The only question is whether it amounts to much..."</li>
<li><strong>Ezra Klein</strong>: <a href="https://www.vox.com/policy-and-politics/2017/11/27/16701780/nyt-nazis-trump"><span style="text-transform: uppercase;">Where the New York Times article on an American Nazi went wrong</span></a>: "Fausset mentions, but does not dwell on, Hovater’s feeling that 'the election of President Trump helped open a space for people like him.'... What is abnormal in this era is not that there are some otherwise normal Americans who hold ugly ideas, but the attention we are giving them."</li>
<li><strong>Lydia DePillis</strong>: <a href="http://money.cnn.com/2017/11/27/news/economy/offshore-accounts-taxes/index.html"><span style="text-transform: uppercase;">Dodging taxes isn't the only reason the rich stash cash offshore</span></a></li>
<li><strong>Ava DuVernay</strong>: <a href="https://twitter.com/ava/status/934878772779614208"><span style="text-transform: uppercase;">@av on Twitter</span></a>: "Just came across an email I sent to a new filmmaker last year who sought advice on shooting her first feature. Maybe it can be helpful to someone else out there. xo..."</li>
<li><strong>Kim Clausing</strong>: <a href="http://thehill.com/opinion/finance/361933-upside-down-tax-plans-hurt-working-americans#.WhxEItwsJMs.twitter"><span style="text-transform: uppercase;">Tax benefits should bubble up, not trickle down</span></a></li>
<li><strong>Joseph Rosenberg</strong>: <a href="http://www.taxpolicycenter.org/taxvox/senate-tax-bill-would-impose-high-marginal-tax-rates-some-pass-through-owners"><span style="text-transform: uppercase;">The Senate Tax Bill Would Impose High Marginal Tax Rates on Some Pass-through Owners</span></a></li>
<li><strong>David Roberts</strong>: <a href="https://www.vox.com/science-and-health/2017/1/9/14186328/risks-climate-change-graph"><span style="text-transform: uppercase;">All the risks of climate change, in a single graph</span></a>: "There are a lot of them..."</li>
<li><strong>Karin Kross</strong>: <a href="https://www.tor.com/2017/11/24/the-revolutionary-optimism-of-iain-m-banks-culture-novels/"><span style="text-transform: uppercase;">The Revolutionary Optimism of Iain M. Banks’ Culture Novels</span></a>: "The market... remains... crude and essentially blind... intrinsically incapable of distinguishing between simple non-use of matter resulting from processal superfluity and the acute, prolonged and wide-spread suffering of conscious beings..."</li>
<li><strong>Matthew Yglesias</strong>: <a href="https://www.vox.com/policy-and-politics/2017/11/22/16683462/trump-tax-is-bad"><span style="text-transform: uppercase;">The theory behind Trump’s tax cuts is exactly what gave us the failed Bush economy - Vox</span></a>: "An influx of foreign hot money isn’t what we need..."</li>
<li><strong>Neera Tanden</strong>: <a href="https://twitter.com/neeratanden/status/934789159373475840"><span style="text-transform: uppercase;">@neeratanden on Twitter</span></a>: "Doug Jones is a prosecutor who went after the KKK. He's also not a child molester. So he's got that going for him..."</li>
<li><strong>Zeynep Tufekci</strong>: <a href="https://twitter.com/zeynep/status/934612194209288192"><span style="text-transform: uppercase;">@zeyneptufekci on Twitter</span></a>: "Yeah, jumped at me that this was an obvious potential path, not explored at all. Can't be a reporter of modern fascism if you don't understand this dynamic. Profiled guy clearly wasn't about the books he rattled off (bet he hadn't read them)..."</li>
</ul>
<hr />
<p><strong>Across the Wide Missouri</strong>:</p>
<ul>
<li><strong>Live from the Journamalists' Self-Made Gehenna</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/live-from-the-journamalists-self-made-gehenna-nate-silver-is-wise-and-correct-here-go-interview-some-swing-voters-inst.html#more">Nate Silver is wise and correct here</a></span>: Go interview some swing voters instead]...</li>
<li><strong>Live from Near Gehenna</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/live-from-near-gehenna-whether-or-not-the-trump-camarilla-is-involved-in-this-the-entire-middle-east-believes-that-it-i.html">Whether or not the Trump camarilla is involved in this</a></span>: The entire Middle East believes that it is because of the timing of the Jared Kushner visit to Saudi—and the absence of any public reason for the visit...</li>
<li><strong>Live from... Well, Near Gehenna</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/live-from-well-near-gehenna-the-downward-spiral-of-israel-continues-a-long-way-yet-to-fall-but-the-direction-is-no.html">The downward spiral of Israel continues.</a></span> A long way yet to fall, but the direction is not good...</li>
<li><strong>Live from the American Libertarians' Self-Made Gehenna</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/looking-forward-to-reading-the-volokh-conspiracy-piece-on-judge-alex-but-i-call-my-male-clerks-into-chambers-and-pinch-thei.html">When is the Volokh Conspiracy</a></span> going to publish its piece on "Judge Alex 'But I Call My Male Clerks into Chambers and Pinch Their Nipples too!' Kozinski...</li>
<li><strong>Live from the Primate Research Labd</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/live-from-the-primate-research-lab-truth-aben%C3%ADtez-burraco-abenitezburraco-on-twitterhttpstwittercomabe.html">Marcy Wheeler</a></span>: "Also, both chimps and bonobos have been known to shred copies of Ayn Rand to create bed litter for their friends..."</li>
<li><strong>Live from the Self-Made Gehenna of the Grand Old Perverts</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/live-from-the-self-made-gehenna-of-the-grand-old-perverts-how-alex-kozinskis-career-survived-the-naked-women-painted-li.html">How Alex Kozinski's career survived the naked-women-painted-like-cows episode is beyond me</a></span>: "Kozinski sent a memo to all the judges suggesting that a rule prohibiting female attorneys from wearing push-up bras..."</li>
<li><strong>Live from the Hot and Dry Santa Barbara Area</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/live-from-the-hot-and-dry-santa-barbara-area-i-do-wish-that-they-would-distinguish-where-it-is-a-grass-and-brush-fire-fr.html">I do wish that they would distinguish</a></span> where it is a grass-and-brush fire from where it is a forest fire...</li>
<li><strong>Live from the Orange-Haired Baboon Cage</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/live-from-the-orange-haired-baboon-cage-a-tribe-of-incompetent-grifters-but-the-donald-mistake-is-more-serious-writing.html">A tribe of incompetent grifters. </a></span> But the Donald mistake is more serious: writing the wrong month for your birthdate is very hard to do without major cognitive decline...</li>
<li><strong>Live from the Orange-Haired Baboon Cage</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/however-this-ends-that-this-is-this-close-is-just-so-awful-awful-awful.html">However This Ends, That This Is This Close Is Just So Awful, Awful, Awful!</a></span>: May I, for one, say that I am overwhelmingly embarrassed at the older white men from the South I have as fellow citizens in this country: Such easily-grifted morons!...</li>
</ul>
<hr />
<p><strong>For the Weekend</strong>:</p>
<ul>
<li><strong>Mel Torme and Judy Garland</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/for-the-weekend-the-christmas-song.html">For the Weekend: The Christmas Song</a></span></li>
<li><strong>For the Weekend</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/for-the-weekend-stephen-vincent-ben%C3%A9t-john-browns-body-i.html">Stephen Vincent Benét: John Brown's Body I</a></span></li>
<li><strong>Weekend Reading</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/in-1836-the-legislature-granted-a-charter-for-a-railroad-running-from-galena-in-the-northwest-corner-to-the-southernmost-ti.html">Sidney Blumenthal on the Finances of Stephen "The Little Giant" Douglas</a></span></li>
<li><strong>Weekend Reading</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/weekend-reading-richard-thaler-behavioral-economics.html">Richard Thaler: Behavioral Economics</a></span></li>
<li><strong>For the Weekend</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/for-the-weekend-o-come-emmanuel.html">Enya: O Come Emmanuel</a></span></li>
<li><strong>Weekend Reading</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/weekend-reading-judge-kozinski-more-stories.html">Judge Kozinski: More Stories</a></span>: "Courtney Milan’s post about Alex Kozinski is a harrowing read, but an important one..."</li>
<li><strong>Weekend Reading</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/nor-trust-in-wodan-walhalls-high-drighten.html">"Nor Trust in Wodan / Walhall's High Drighten..."</a></span></li>
<li><strong>Weekend Reading</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/weekend-reading-courtney-milan-judge-kozinski.html">Courtney Milan: Judge Kozinski</a></span>: "Judge Kozinski had a way of summoning his clerks..."</li>
<li><strong>For the Weekend</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/for-the-weekend-veni-emmanuel.html">Veni Emmanuel</a></span></li>
<li><strong>Weekend Reading</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/weekend-reading-daniel-webster-march-7-1850.html">Daniel Webster: March 7, 1850</a></span></li>
<li><strong>For the Weekend</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/for-the-weekend-o.html">O...</a></span></li>
<li><strong>For the Weekend</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/for-the-weekend-scott-aaronsons-take-on-quantum-mechanics.html">Scott Aaronson's Take on Quantum Mechanics</a></span></li>
</ul>
<hr />
<p><strong>Readings</strong>:</p>
<ul>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/three-books.html">Three Books for 2017: Economics for the Common Good, Janesville, Economism</a></span></li>
</ul>
<hr />
<p><strong>Monday Smackdown</strong>:</p>
<ul>
<li><strong>Monday Smackdown</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/monday-smackdown-treasury-document-translation-steve-mnuchin-is-not-a-professional-treasury-secretary-he-and-his-personal.html">:Treasury Document Translation: Steve Mnuchin Is Not a Professional Treasury Secretary. He and His Personal Staff Are Grifters</a></span></li>
<li><strong>Monday Smackdown</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/early-hoisted-monday-delong-smackdown-watch-cosma-shalizi.html">(Early Hoisted) Monday DeLong Smackdown Watch: Cosma Shalizi</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/monday-smackdown-treasury-document-translation-steve-mnuchin-is-not-a-professional-treasury-secretary-he-and-his-personal.html">Monday Smackdown: Treasury Document Translation: Steve Mnuchin Is Not a Professional Treasury Secretary. He and His Personal Staff Are Grifters</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/early-monday-smackdown-tax-reform-intellectual-garbage-cleanup-edition.html">(Early) Monday Smackdown: Tax Reform Intellectual Garbage Cleanup Edition</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/monday-smackdown-nine-republican-economists-being-unprofessional-on-tax-reform-edition.html">Monday Smackdown: Nine Republican Economists Being Unprofessional on Tax Reform Edition</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/monday-smackdown-trying-to-get-in-touch-with-my-inner-austrian-was-a-bad-mistake-in-2004-and-a-horrible-misjudgement-in-200.html">Monday DeLong Smackdown: Trying and Failing to Get in Touch with My Inner Austrian Back in 2004...</a></span></li>
</ul>
<hr />
<p><strong>Tuesday Hoisted</strong>:</p>
<ul>
<li><strong>Hoisted from the Archives</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/watching-bitcoin-dogecoin-etc-hoisted-from-2014-01-05-plus-update-graph.html">Watching Bitcoin, Dogecoin, Etc... 2014-01-05, Plus Update Graph</a></span></li>
<li><strong>Hoisted</strong>: <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/early-hoisted-monday-delong-smackdown-watch-cosma-shalizi.html">(Early Hoisted) Monday DeLong Smackdown Watch: Cosma Shalizi</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/hoisted-from-the-archives-night-thoughts-on-dynamic-scoring.html">Hoisted from the Archives: Night Thoughts on Dynamic Scoring</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/12/the-great-depression-from-the-perspective-of-today-and-today-from-the-perspective-of-the-great-depression-hoisted-from-2013.html">The Great Depression from the Perspective of Today, and Today from the Perspective of the Great Depression: Hoisted from 2013</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/in-which-i-try-and-fail-to-understand-the-current-state-of-right-wing-monetary-economics-hoisted-from-2014.html">In Which I Try and Fail to Understand the Current State of Right-Wing Monetary Economics: Hoisted from 2014</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/on-the-negative-information-revealed-by-marvin-goodfriends-i-dont-teach-is-lm-hoisted-from-the-archives.html">On the Negative Information Revealed by Marvin Goodfriend's "I Don't Teach IS-LM": Hoisted from the Archives</a></span>* <span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/hoisted-from-the-archives-from-2006-the-madmen-in-the-attic.html">Madmen in the Attic: Hoisted from the Archives from 2006</a></span></li>
<li><span style="text-transform: uppercase;"><a href="http://www.bradford-delong.com/2017/11/monday-smackdown-trying-to-get-in-touch-with-my-inner-austrian-was-a-bad-mistake-in-2004-and-a-horrible-misjudgement-in-200.html">Monday DeLong Smackdown: Trying and Failing to Get in Touch with My Inner Austrian Back in 2004...</a></span></li>
</ul>
<hr />
<p><strong>Comment of the Day</strong>:</p>
</div>
The Broken Political System of the United States...: No Longer Fresh at Project Syndicatetag:typepad.com,2003:post-6a00e551f08003883401bb09db3878970d2017-12-24T05:36:44-08:002017-12-24T05:36:44-08:00**Project Syndicate**: [America’s Broken Political System](https://www.project-syndicate.org/commentary/us-tax-reform-failed-governance-by-j--bradford-delong-2017-12): From an Olympian perspective, the "tax reform" bill is not the biggest of deals. It is medium-sized news. The big news is elsewhere—but related. First, the medium-sized news: The “tax reform” bill, if it should pass, would most likely reduce the federal government's resources by about 1%-point of national income. It would most likely transfer those resources to the top 1%—raising the top 1% share of income from 22% to 23%, and even those gains would be concentrated, with the top 0.01% share of income most likely going from 5.1% to 5.5%. It would most likely do nothing to speed economic growth. But it would not be likely to do anything material to slow economic growth either. It would complicate the tax system by opening many loopholes—if it passes, I would not expect to ever understand my own taxes again. It would be another brick, not a huge brick but a medium sized brick, in the wall that American plutocracy is constructing to enrich and entrench itself. But now, second, the big news: The Anglo-Saxon model of representative government is in deep trouble. For four hundred years there was a very strong case that...J. Bradford DeLong

Project Syndicate: America’s Broken Political System: From an Olympian perspective, the "tax reform" bill is not the biggest of deals. It is medium-sized news. The big news is elsewhere—but related.

First, the medium-sized news: The “tax reform” bill, if it should pass, would most likely reduce the federal government's resources by about 1%-point of national income. It would most likely transfer those resources to the top 1%—raising the top 1% share of income from 22% to 23%, and even those gains would be concentrated, with the top 0.01% share of income most likely going from 5.1% to 5.5%. It would most likely do nothing to speed economic growth. But it would not be likely to do anything material to slow economic growth either. It would complicate the tax system by opening many loopholes—if it passes, I would not expect to ever understand my own taxes again.

It would be another brick, not a huge brick but a medium sized brick, in the wall that American plutocracy is constructing to enrich and entrench itself.

But now, second, the big news: The Anglo-Saxon model of representative government is in deep trouble. For four hundred years there was a very strong case that the republican semi-principality of the Netherlands, the constitutional monarchy of Great Britain, and the constitutional republic of the United States of America had managed to hit the sweet spot with respect to liberty, security, and prosperity. Countries that sought those goals—or, indeed, any one of them—were strongly advised to seek to imitate their institutions to as great a degree as their elites could be pushed to accept. And the verdict of history appeared to be: the greater the divergence from Anglo-Saxon institutions of governance, the greater the likelihood of unfreedom, insecurity, and poverty.

But nobody looking at institutional governance performance so far in the third millennium would dare to offer the same advice today. In Britain, the Conservative and Liberal Parties caught the country up in the Charybdis of austerity from which the Conservative Party then threw it into the maw of the Scylla of Brexit. In the United States, it is the age of “covfefe”—incoherent tweets and speeches from a President well over his head, plus those tweets and speeches nearly all informed observers merely wish had been incoherent.

There were people assuring us last November that a Trump presidency would not be a disaster. They would say that Reagan—at least after he survived the assassination attempt—was more a chief-of-state than a chief executive, and that George W. Bush had been the same; that when one elected a Republican president one was choosing to have the executive branch run by the Republican policy establishment; and that that bench was very deep and very competent—although, regrettably, by the 2000s both Cheney and Rumsfeld had lost several steps in judgment from their earlier selves. Trump, they would say, would be a chief-of-state—a divisive and destructive one focused on pleasing the base. But policy would proceed on its normal tracks.

The problem is that this has proved false. The Trump administration supposedly had four priorities for 2017: healthcare reform, tax reform, infrastructure development, and trade policy. Yet 2017 will end with no positive accomplishments on any of these.

“What are you going to do to fix your broken political and governance system?” people around the globe ask those of us in the United States, which is still the world’s preeminent superpower. And we do not have an answer.

Reinvent: Determining Bargaining Power in the Platform Economytag:typepad.com,2003:post-6a00e551f08003883401b7c93f7ab8970b2017-12-23T17:55:02-08:002018-01-03T19:55:56-08:00**Reinvent**: [Determining Bargaining Power in the Platform Economy](http://reinvent.net/events/event/determining-bargaining-power-in-the-platform-economy/): Our political system has been hacked by time, circumstance, chaos, and disaster... ...The failings of the electoral college, the fact that small states hacked the constitution in 1787, so we now have a world in which the minority in the Senate represents 175 million people, while the majority represents 145 million people, and the gerrymandering after the 2010 census are primary examples of this dysfunction. Fixes for the economy?: * A 4 percent inflation target from the Federal Reserve, * Incentivizing businesses to invest in workers, * Reinvigorating the idea that technology should be used to augment workers, not replace them. The possibilities for positive human flourishing from the platform economy are immense, provided the platforms actually work. Uber’s investors are currently paying 40 percent of Uber’s costs. What happens when these investors start wanting their money back? The platform economy moves bargaining power away from the service providers and from the customers, and into the hands of the platforms. This is a problem for both consumers and independent workers. What bargaining power workers will have will be correlated to the time and resources devoted to training them: when you walk, you...J. Bradford DeLong

...The failings of the electoral college, the fact that small states hacked the constitution in 1787, so we now have a world in which the minority in the Senate represents 175 million people, while the majority represents 145 million people, and the gerrymandering after the 2010 census are primary examples of this dysfunction.

Fixes for the economy?:

A 4 percent inflation target from the Federal Reserve, * Incentivizing businesses to invest in workers,

Reinvigorating the idea that technology should be used to augment workers, not replace them.

The possibilities for positive human flourishing from the platform economy are immense, provided the platforms actually work. Uber’s investors are currently paying 40 percent of Uber’s costs. What happens when these investors start wanting their money back? The platform economy moves bargaining power away from the service providers and from the customers, and into the hands of the platforms. This is a problem for both consumers and independent workers. What bargaining power workers will have will be correlated to the time and resources devoted to training them: when you walk, you disrupt a general production value chain, and it is expensive to figure out how to replace you, even if there’s someone else who certainly could do the job just as well. But if it is not very expensive, you have little power.

Nevertheless, here in California it is hard not to be a techno-optimist—especially if you are an curious infovore...says...

Full Transcript:

Pete Leyden: Hello. I'm Pete Leyden. Today, we have Brad DeLong with us. He is an economics professor here at U.C. Berkeley. He's also the recently installed chief economist of the Blum Center for Developing Economy.

Pete Leyden: It's good to have you here.

Brad DeLong: Great to be here.

Pete Leyden: We’re here at this moment with all these folks from the OECD, the economists from the United States here, and the technologists. If you had to think about the kind of moment we're in right now, how would you characterize where we are as far as the evolution of the global economy and our technologies are? Is there anything special about this moment? Anything critical about it? Any ways you think about this juncture?

Brad DeLong: Let me give you a three-part answer to that: a 50-year horizon answer, a 15-year horizon answer, and then a 0-5-year horizon answer.

Brad DeLong: The 0-5-year horizon answer is: America has been deeply scarred by the financial crisis that started in 2007, the deep recession that followed, and the extraordinarily anemic recovery since. That still leaves us with four million people fewer in the labor force and looking for jobs than we ought to have. We are not sure what all of them are doing. Many are living in their sisters' basements playing video games. The economy and people's expectations of how it works have been shocked. How well our society functions is still deeply scarred. We are recovering only slowly, if at all, back to what we used to think was normal. that is the 0-5-year horizon answer.

Brad DeLong: The 50-year horizon answer is: Expect the collapse of the need for people to do a great many tasks that people used to do and are still doing that provide value. In the next 50 years an awful lot of paper-shuffling tasks are going to be taken over by software bots. An awful lot of blue-caller, traditionally male, tasks are going to be taken over by robots. Few occupations will disappear. But many occupations will be transformed. And many will shrink. The income and wealth distribution will be upset—either in a positive or a negative direction. These 50-year horizon processes are what most of us upstairs at this conference are worrying about.

Brad DeLong: Then there's a 10- to 15-year horizon. How much of this transformation is going to happen in the next 15 years, as opposed to the rest of the next 50? How fast is the 50-year horizon process going to come upon us? Where exactly will be the first sectors and first places in which the coming of—call it the “Rise of the Machines”—the replacement not just of blue-color manufacturing but also construction and transportation and distribution and warehouse workers will be hit by technology, and who? Where and when will a good deal of standard white-color paper-shuffling work start to disappear as expert systems and software bots take it over?

Pete Leyden: In your career, is this about as momentous a time as you've seen? Or is that overhyping it?

Brad DeLong: That we are recovering from the macroeconomic catastrophe that started in 2007 has definitely made it very, very fraught. The failure of our Electoral College to deliver us a competent president in 2016 has definitely made it very, very fraught. Our political system was hacked partially by malevolent people, but mostly by time, circumstance, chaos,